The CFTC and European Commission now will recognize each other's rules on swap margin requirements and will let swap trading venues under their jurisdictions follow their home region's regulations.
Under the agreement, announced Oct. 13, the CFTC and EC determined that the margin requirements for uncleared swaps under European Union law are "comparable in outcome" to those under Commodity Futures Trading Commission rules, according to a news release from the CFTC.
Additionally, CFTC Chairman J. Christopher Giancarlo and Valdis Dombrovskis, EC vice president for financial stability, financial services and capital markets union, agreed to work to adopt equivalency determinations on swap execution, according to the release. Under what the CFTC called a "common approach" between the agency and the EC, CFTC-approved swap-execution facilities would receive EC equivalence approval if the venues meet the requirements of the EU's Markets in Financial Instruments Directive I and II, and venues approved by the EC would be exempt from registering with the CFTC as a swap-execution facility.
"These cross-border measures will provide certainty to market participants and also ensure that our global markets are not stifled by fragmentation, inefficiencies and higher costs," Mr. Giancarlo said in the news release
The agreement is the second major one involving equivalence determinations between the EC and CFTC this year. In February, the regulators agreed to implement equivalence rules for central counterparties in the U.S. and EU, allowing European and U.S. central counterparties to operate without additional regulatory requirements.