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by Craig Donner

The European Union has taken an important step forward in efforts to reform its regulatory framework and establish new rules for over-the-counter (OTC) derivatives.

Legislators entered the final round of negotiations to complete the new regulation that will govern the OTC derivatives market in mid-October, with expectations of completing negotiations before year-end.

On ECOFIN’s agenda

In a legislative breakthrough during the early October meeting of European finance ministers, the Polish presidency successfully completed the Council draft of the European Market Infrastructure Regulation (EMIR), and reached political agreement to begin negotiations among the Council, Parliament and Commission.

“The Polish presidency moved aggressively to finalize the Council position and set the stage for the final round of negotiations,” said Dan Cohen, DTCC managing director and head of Government Relations. “The E.U. member states reached agreement on many important outstanding issues, paving the way for completing the Council draft at ECOFIN.”


The Council text included a provision supported by DTCC that would give central counterparties (CCPs) access to the data feeds of trading venues. DTCC had advocated for this language because it is critical in opening up the clearing market to competition and allowing clearinghouses like EuroCCP to access a wider market.

The text does not address third-country matters of extraterritoriality or indemnification. Those issues will be addressed during the trialogue, as negotiations among the Council, Parliament and Commission are known. DTCC has been meeting regularly with European legislators and regulators to voice concern over the potential for reduced market transparency if EMIR includes an indemnification provision similar to the one in the U.S. Dodd-Frank Act.

“If indemnification is enacted globally, supervisors in Europe and Asia would have no choice but to create their own national or regional repositories to avoid indemnification,” said Andrew Douglas, DTCC vice president and head of Public Affairs in Europe. “This would jeopardize market safety and soundness by fragmenting what should be a global dataset. While there had been talk in Europe of adding reciprocal indemnification language in EMIR, it appears that lawmakers may be inclined to take a different approach and require indemnity agreements to be signed only in situations where another nation has implemented the same provision.” @