European Commission Makes Equivalence Determination for SEC-Registered Clearing Agencies

The European Commission ("EC") issued an equivalence decision that the SEC's regulatory framework for central counterparties ("CCPs") is equivalent to that of the European Union.

The equivalence decision will allow U.S. SEC-registered CCPs to apply for recognition with the European Securities and Markets Authority (or "ESMA"), which, if granted, would allow SEC-registered CCPs to provide central clearing services in the European Union. The equivalence decision is conditioned on U.S. CCPs meeting certain risk mitigation standards with regard to liquidation periods and anti-procyclicality measures.

The EC stated that the equivalence decision with regard to the SEC complements the existing equivalence decision for U.S. CFTC-registered CCPs (see previous coverage here).

SEC Acting Chair Allison Herren Lee stated that the equivalence decision "is an important first step on the road to providing greater regulatory certainty for CCPs and their members on both sides of the Atlantic."