EU/US agreement on equivalence for derivatives trading

Published: 17 October 2017

On 16 October, the European Commission (EC) and the Commodity Futures Trading Commission (CFTC) reached a Common Approach on Certain Derivatives Trading Venues.

This Common Approach relates to the matter of equivalence of respective US and EU trading venues for the purposes of the derivatives trading obligation which is currently in effect in the US and is due to enter into effect in the EU for certain classes of instruments and counterparties as of 3 January 2018. The EC states that it intends to propose an equivalence decision covering CFTC authorised Swap Execution Facilities (SEFs) and Designated Contract Markets (DCMs). Similarly, the CFTC intend to propose an exemption from SEF registration for trading venues authorised in accordance with MiFID II. Each side would be able to request updates to those venues covered on an ongoing basis. The mutual recognition of venues would enable firms to trade on either EU or US trading venues in satisfaction of both the EU and US trading obligations, rather than being forced into breaching one or other of the requirements.  

The EC and CFTC will now work as expeditiously as practicable to finalise the equivalence regime and to exchange lists of those venues to be covered.

If members have any questions or comments, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.