Sources are telling news agencies that the European Union is poised to pass OTC derivatives clearing rules that will exempt most companies and foreign exchange. While the 27 member countries still have to hammer out the details of the new rules, the heart of the matter is all but settled, according to reports.
The movement to require clearing for OTC derivatives emerged from the financial crisis. The reasoning is by requiring central clearing, which is done in the exchange-traded futures market, market participants and others would be better protected from a major default. It now appears that the final versions of those rules will apply only to companies speculating in OTC derivatives, while those firms employing the contracts to mitigate risk may avoid clearing requirements.
The guidelines and thresholds for when clearing requirements will kick in are still being debated, reports say.
- EU reaches consensus on derivatives exemptions
- EU Member States Reach Consensus On Derivatives Exemptions
- EU proposes some derivatives clearing exemptions
