MFA Recommends Greater Harmonization Of CFTC/EU Swaps Trading Rules

The Managed Funds Association ("MFA") published a comparative analysis of U.S. and European Union ("EU") derivatives trading regimes, and made recommendations for further cross-border harmonization. The MFA found the two regimes to be aligned in many important areas. The MFA identified two areas where harmonization could be improved: (1) the calibration of the transparency regime in the EU, and (2) whether prearranged trading is permitted for instruments subject to the trading obligation in the EU.

The MFA made the following observations and recommendations:

• Pre-trade transparency/modes of execution: evaluate European Securities and Markets Authority ("ESMA") "transitional transparency calculations" to ensure that liquidity classifications are appropriate and market participants receive adequate liquidity. The CFTC should consider allowing greater flexibility for execution on swap execution facilities.