2018/2019 Edition of the Global Regulatory Update

Treasury and Trade Solutions 56 may recognise that the regulatory or supervisory regime of a non-E.U. country is equivalent to the corresponding E.U. regime”. https://ec.europa.eu/info/business- economy-euro/banking-and-finance/international-relations/recognition-non-eu- financial-frameworks-equivalence-decisions_en Equivalence decisions can enable firms with cross-border relationships and capabilities to comply with only one set of regulations, rather than two. It is important for the harmonisation of international markets, and helps to alleviate the uncertainty, disproportionately increased costs and complexity that arises as a result of differing regulatory requirements and operational burdens. The effect of the equivalence decision is to reduce regulatory burdens and enable counterparties that are subject to both E.U. and U.S. rules to choose between the E.U. or U.S. rules, while also being in compliance with the rules they choose not formally to adhere to. This is of practical relevance to those counterparties subject to E.U. and U.S. risk mitigation techniques and margin requirements, namely relevant E.U. counterparties subject to margin requirements, U.S. major swap participants, and U.S. swap dealers that had been complying with the E.U. regime but who may choose to adhere to U.S. margin rules instead. The decisions also have the effect of enabling transactions between E.U. and U.S. counterparties that are part of the same group to be classified as intragroup transactions under certain provisions of EMIR in certain circumstances. Such intragroup counterparties are then able to benefit from certain EMIR intragroup exemptions that had previously been available only to group counterparties within the E.U. 3) Taxation a) U.S. Tax Reform The 2017 U.S. tax reforms present the most sweeping tax changes (including changes to business, international and individual tax rules) since President Reagan signed the Tax Reform Act in 1986. More commonly known as the “Tax Cuts and Jobs Act” (TCJA), which eventually became a much longer name, the provisions are specifically designed to bring back large amounts of capital that has accumulated offshore for decades, encourage U.S. corporates to spend them in the U.S. for jobs creation and to expand the manufacturing base in the U.S. with a competitive if not lower territorial tax rates than many other developed countries.