The House Committee on Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit (the "Subcommittee") raised concerns over potential European "encroachment" on U.S. clearinghouse oversight as a result of the implementation of European Markets Infrastructure Regulation 2.2 ("EMIR 2.2").
In a letter to the European Securities and Markets Authority ("ESMA"), Subcommittee Chair David Scott and Ranking Member Austin Scott said that the Subcommittee views potential European action of clearinghouses with "deep skepticism." The letter suggested the proposed implementation of EMIR 2.2 could undo the 2016 equivalence agreement, resulting in (i) an overly complex compliance regime, (ii) conflicting requirements, and (iii) global market fragmentation. Further, the Subcommittee expressed concern over the prospect of ESMA "unilaterally" applying EU law to U.S. clearinghouses, while relying on U.S. regulators to enforce these regulations.
In addition, the Subcommittee stated it would "not be prudent" to move forward with the proposed implementation without the support of the CFTC, and called for a mutually agreed upon solution to avoid a "regulatory arms race" and prevent damage to global markets.
In response to the European Securities and Markets Authority draft technical advice on criteria for tiering and comparable compliance, a number of associations concluded that certain indicators are so broad they create legal ambiguity.
The U.S. House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit considered testimony on international developments that could affect the U.S. derivatives markets.
Cadwalader attorneys analyzed recently adopted amendments to European counterparties trading derivatives obligations under the European Market Infrastructure Regulation.