August 30, 2013

OTC Derivatives Regulators Issue Report to the G20

Washington, DC – Today, authorities with responsibility for the regulation of over-the-counter (OTC) derivatives markets in Australia, Brazil, the European Union, Hong Kong, Japan, Ontario, Quebec, Singapore, Switzerland and the United States issued a report regarding common understandings to improve the cross-border implementation of OTC derivatives reforms.  This report responds to an April 2013 request by the G20 Finance Ministers and Central Bank Governors, urging key OTC regulators to intensify their efforts to address and resolve remaining cross-border conflicts, inconsistencies, gaps and duplicative requirements by the St. Petersburg Summit, which will take place on September 5-6, 2013.

The report reflects a number of substantive understandings to improve the cross-border implementation of OTC derivatives reforms, including the following:

• Early and comprehensive consultation among relevant authorities when equivalence or substituted compliance assessments are being undertaken is essential.

• A flexible, outcomes-based approach should form the basis of final assessments regarding equivalence or substituted compliance assessments.

• A “stricter-rule” approach would apply to address gaps in mandatory trading or clearing obligations.

• Authorities have a framework for consultation on mandatory clearing determinations.

• Jurisdictions should remove barriers (1) to reporting to trade repositories by market participants and (2) to access to trade repository data by authorities.

• There should be appropriate transitional measures and a reasonable but limited transition period for foreign entities to implement OTC derivatives reforms.

The report also recognizes that challenges will continue to arise in the implementation of OTC derivatives reforms and presents a number of additional topics for further discussion, including authorities’ direct access to registrant information and the treatment of foreign bank branches and guaranteed subsidiaries. 

Finally, the report recognizes that open communication is vital to ensure there is common understanding of each jurisdiction’s processes and timelines to implement OTC derivatives reforms, and that flexibility in the application of cross-border regulation will be needed to make progress toward cross-border consistency.

Last Updated: August 30, 2013