Statement of Chairman J. Christopher Giancarlo on EMIR 2.2

March 13, 2019

Boca Raton, FL – The Chairman of the U.S. Commodity Futures Trading Commission (CFTC), J. Christopher Giancarlo, today issued the following statement on cross-border derivatives regulation on the occasion of a political agreement by EU co-legislators on the EMIR 2.2 legislation.

The CFTC recognizes the significant step that the EU has taken in reaching agreement on the EMIR 2.2 legislation.  It will provide EU authorities with greater ability to monitor and manage the EU’s exposure to systemic risk benefiting all market participants that transact in the EU derivatives markets.

The United States has informed the European Commission and other EU authorities of a range of concerns regarding the implementation of EMIR 2.2 and its potential impact on U.S. CCPs and the broader U.S. financial markets.  We have made clear U.S. expectation that these concerns will be afforded due consideration during the upcoming development of the EMIR 2.2 delegated acts and application of EMIR 2.2. 

While EMIR 2.2 requires a number of implementation steps such that application of EMIR 2.2 to U.S. CCPs will likely not take effect until 2021 or beyond, it is understood that during this time EU authorities, including the European Commission and European Securities and Markets Authority, will work with the CFTC to address U.S. concerns.  It is understood that the starting point for any future recognition assessment of U.S. CCPs will be the EC’s current 2016 equivalence decision and the recognition decisions made as a product of the agreement between the CFTC and EC in 2016.  This understanding is critical to allow for the continued economic growth, vitality and stability of our transatlantic derivatives markets.

For the past eighteen years, the CFTC has regulated CCPs domiciled outside of the U.S. based on the core principle of deference to the oversight of primary regulators. This approach has helped to create durable liquidity pools for effective risk management that supports economic growth both in the U.S. and globally. The approach does not impinge on national laws and practices that are essential to domestic derivatives markets.  Moreover, it provides legal certainty to market participants while preserving the ability of the primary home countries of global CCPs to oversee their markets as they deem necessary and appropriate. 

The CFTC staff’s current review of CFTC cross-border regulations, along the lines set forth in the recent white paper, Cross-Border Swaps Regulation Version 2.0,[1] is based on the premise that, in order to effectively achieve the G20 reforms in a global derivatives market, it is necessary for national regulatory authorities to embrace deference and apply it to those jurisdictions that have comparable regulatory and supervisory regimes.