Asia Pacific Clearing Houses Given European Approval

European regulators have granted equivalence to ten clearing houses operating in the Asia Pacific region allowing them to provide clearing services to the EU.

The European Securities and Markets Authority recognised central counterparties from Hong Kong, Singapore, Japan and Australia as the first institutions outside of Europe to comply with its rules.

Those clearing houses include ones runs by the Australian Securities Exchange, Singapore Exchange and Hong Kong Exchanges and Clearing.

After reviewing the jurisdictions which each CCP was based in, the European Commission declared them as equivalent to European clearing rules.

Equivalence has still not been granted to U.S. CCPs in a long-running standoff between European and US regulators.

If Europe doesn’t recognise U.S. CCPs by June this year, it will have to delay new capital requirement rules again, as it did in December 2014.

This is because the cost of trading and clearing through U.S. CCPs would rise substantially if they were not deemed as having equivalent standards to Europe.

“The continued omission of the U.S. is, however, the main concern for everyone. It’s been talked about a lot recently and it would be great to see a deal in place in the coming weeks – the ideal outcome would be for regulators on both sides of the Atlantic to work together to address problems caused by the extra territorial reach of both regulatory systems in the derivatives market that is forcing localisation on a global market,” says Michael Voisin, Derivatives partner at Linklaters.

“Legislators and regulators need to be flexible and creative in the interpretation of existing legislation and delegated rules to achieve this critical objective.”