After extensive negotiations, the U.S. and the European Union agreed to accept each other’s derivatives rules in order to preserve the smooth functioning of the $550 trillion global derivatives market. The arrangement will allow U.S. clearinghouses or central counterparties to continue providing services to EU banks, and EU CCPs will be able to do business with U.S. customers while complying with EU rules deemed comparable to U.S. rules. In addition, the agreement provides a partial carve-out from EU rules for derivatives contracts on U.S. agricultural products.
A need for consensus arose after it became clear that regulatory divergence and inconsistent implementation of derivatives reform between the U.S. and EU threatened to disrupt the stability of the global derivatives market. ABA, working through the International Banking Federation, was a strong advocate for the resolution of this issue, urging regulators to prioritize consistency across their regulatory regimes and make compliance determinations based on principles of mutual recognition.