LONDON May 10 The European Union should think
carefully before forcing through any changes to where clearing
of euro-denominated securities like derivatives and bonds is
located after Brexit, the top U.S. derivatives regulator said on
Brussels is looking at whether euro-denominated clearing, an
activity dominated by London, should be moved to the single
currency area after Britain leaves the bloc in 2019.
Christopher Giancarlo, acting chairman of the U.S. Commodity
Futures Trading Commission, told the annual conference of global
derivatives industry body ISDA that he was respectful of the
fact that "this is an important regulatory policy decision that
needs to be made with care by European officials."
The issue is politically sensitive at a time when Britain
and the EU embark on divorce talks, with legislative proposals
on clearing due from Brussels next month.
Giancarlo also drew attention to the European Commission's
consideration of a less radical option than moving clearing from
London, which would involve tighter supervision of foreign
clearing houses that handle large amounts of euro clearing.
A clearing house or central counterparty (CCP) stands
between two sides of a trade, ensuring its completion even if
one side goes bust.
The CFTC has a lot of experience in the supervision of
clearing houses both in the United States and abroad, Giancarlo
"We welcome the opportunity to discuss the CFTC's experience
with officials in Europe."
"To date, the US has not deemed a body of water – even as
large as the Atlantic Ocean – as an impediment to effective CCP
supervision and examination," he said.
He also said that given the closeness of the U.S. and
European derivatives markets, what Europe decided to do on the
supervision of clearing houses "undoubtedly will inform the
evolution of US regulatory policy for cross-border swaps
(Reporting by Huw Jones. Editing by Jane Merriman)