2018/2019 Edition of the Global Regulatory Update

Global Regulatory Update  | Corporates Edition 55 4. In early June, the five agencies responsible for the Volcker Rule in the U.S. (Federal Reserve Board, OCC, FDIC, SEC, CFTC) jointly issued a proposal that would revise the Volcker Rule. The proposal would eliminate the 60-rebuttable presumption from the current definition of “proprietary trading,” as proposed in the Treasury recommendations. There are other Treasury recommendations that are also picked up in the inter-agency proposal. 2) Securities infrastructure a) Derivatives Reforms U.S.-E.U. equivalence Cross border derivatives (which make up the majority of the derivatives market) have been subject to rules on both sides of the Atlantic. In the U.S. for example these are enshrined in Dodd Frank Title VII and in Europe they are covered by the European Markets Infrastructure Regulation (EMIR) which is under review by E.U. policymakers and is covered in a separate section of this guide. Regulators on both side of the Atlantic have been working very closely on cross border derivatives with a view to aligning their respective rules in a way that conflict of laws can be avoided. After 3 years of negotiation finally in February 2016 the European Commission and the Commodity Futures Trading Commission (CFTC) struck a deal for common standards for derivatives and for clearing houses. Since the publication of our last guide the European Commission (EC) published their Implementing Decision in the Official Journal on 14 October 2017 covering equivalence in relation to U.S. rules with respect to certain aspects of EMIR (the risk mitigation techniques and margin requirements afforded to un-cleared over-the-counter (OTC) derivative transactions). This can be found here: https://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:32017D1857&from=EN . The equivalence decision took effect from 3 November 2017. In October 2017 the Commodity Futures Trading Commission (CFTC) determined that the E.U.’s margin requirements are comparable to the U.S.’s margin requirements for un-cleared swaps applicable to swap dealers and major swap participants not subject to prudential regulation. Also in October 2017, the EC and CFTC jointly announced a common approach relating to the trading obligation for derivatives. Regulatory equivalence means that one country may recognise that the regulatory or supervisory regime of another country is equivalent to its corresponding framework. As per the European Commission’s explanation on their website – link below “In certain cases the E.U.