AIMA Wants Changes To EU OTC Derivatives Rules

May 23 2011 | 12:26pm ET

Proposed EU regulations for over-the-counter derivatives could erect new barriers to international clearing, says a hedge fund lobby group.

The Alternative Investment Management Association, counting 1,200 members from the global hedge fund industry, wants EU lawmakers to reconsider a provision of the European Market Infrastructure Regulation which it argues could effectively exclude EU-established financial services providers from using central counterparties not based in the EU.

Under the terms of the EP draft text, a third-country CCP would only be permitted to provide clearing services to EU entities if those entities obtained an authorization in each individual EU member state. Furthermore, the third-country CCP would only be allowed to obtain such an authorization if the European Commission recognized that the legal and supervisory arrangements of its home jurisdiction were “equivalent” to those contained within EMIR.
AIMA believes it could be difficult for many third countries and their CCPs to meet these criteria given the differences between the requirements on CCPs, clearing members and clients.
Said AIMA CEO Andrew Baker: “AIMA is supportive of open international markets and opposes measures which could result in the erection of unjustifiable barriers to international trade. We believe it is important that, in particular, counterparties in the European Union and the US can still trade freely and use each other’s financial services. We believe that it is important that the international nature of the OTC derivatives market is maintained and that any unnecessary restrictions on international trading are avoided."

The EP’s economic and monetary affairs committee is scheduled to vote on the issue on May 24.

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