United States: CFTC Commissioner Advises European Union Regulators To Continue Cross-Border Regulatory Deference

CFTC Commissioner Brian Quintenz urged European Union ("EU") regulatory authorities to recommit to deference-based regulation of cross-border central counterparties ("CCPs"). Mr. Quintenz expressed concern over recently proposed legislation by the European Commission that, in his view, would undermine the terms of the 2016 CCP equivalency determination between the CFTC and the European Commission.

In remarks at the Institute of International Bankers Membership Luncheon, Mr. Quintenz revisited the 2016 CCP equivalence determination, which was built upon both (i) a CFTC-issued comparability determination for EU-domiciled clearinghouses registered with the CFTC and (ii) the EU's equivalence determination for U.S. clearinghouses registered with the CFTC. The European Commission-proposed legislation, according to Mr. Quintenz, would "unilaterally abandon" this agreement. He argued that the proposed legislation would require CFTC-registered U.S. clearinghouses that are systemically significant to adopt the EMIR and adhere to regulation by the European Securities and Markets Authority and the European Central Bank.

Mr. Quintenz recommended that the European Commission revise its proposed legislation to include a "middle-tier" category for CCPs that are not independently systemically significant to the European Union. Mr. Quintenz also suggested that the European Commission "establish a consultative role for central banks" in line with the approach used by the CFTC.

Additionally, Mr. Quintenz argued that there are many different means by which to achieve a shared goal, and proposed that "regulators should have the discretion to adopt the framework that works best for their markets." He outlined regulatory steps taken by the CFTC in the areas of algorithmic trading and position limits, and cautioned that the CFTC's approach "may not follow in lockstep with EU regulatory authorities."

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