ESMA Advice On Third-Country Equivalence Under EMIR

Clarity to market participants on the equivalence of derivatives rules to European requirements has been much anticipated. On 3 September, ESMA published its technical advice to the European Commission on the equivalence of the US and Japanese derivatives frameworks to the EU rules. The advice is not the final EU statement on the equivalence of these regimes, because the European Commission is charged with adopting legislative acts on equivalence. Once it has considered ESMA's advice, the Commission has the discretion (not apparently limited to concerns about financial services) to declare equivalence. Broadly speaking, several US and Japanese rules on derivatives have been considered equivalent, but this is subject to market participants agreeing to apply European standards, where higher.