EU postpones decision on robustness of U.S., Japan swaps rules

EU, U.S in spat over swaps rules

The European Union will take more time to assess U.S. and Japanese rules for swaps trading as it scrutinizes banks’ access to clearinghouses based outside the 27-nation bloc.

The European Commission gave regulators a Sept. 1 deadline to complete a review of the measures, allowing them to “take account of international on-going developments,” according to a letter published on the website of the European Securities and Markets Authority. The previous deadline was June 15.

The EU and the U.S have been locked in an escalating spat over swaps rules amid warnings from the bloc that planned U.S. requirements would leave EU banks saddled with extra costs and incompatible legal obligations.

The international reach of U.S. Commodity Futures Trading Commission rules has been one of the most controversial elements of the U.S. Dodd-Frank Act, prompting opposition from financial companies including Goldman Sachs Group Inc. and Barclays Plc, as well as EU, Asian and South American regulators. Nations may discuss the measures at a June 20 meeting of derivatives regulators in Montreal, Canada.

Under EU legislation adopted in 2012, which is still being phased in, banks can face barriers to using clearinghouses based outside the bloc unless the European Commission has deemed the other country’s regulations to be as robust as the EU’s. The commission has tasked ESMA with carrying out assessments to aid it in reaching these so-called equivalence decisions.

The commission also extended ESMA’s deadline for other national swap-rule assessments to Oct. 1.

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