Europe is set soon to recognise at least four more countries, including Canada and Mexico, as having “equivalent” rules to oversee clearing houses, marking another step forward in Brussels’ efforts to facilitate cross-border activity in derivatives.

The disclosure, by Patrick Pearson, head of the financial market infrastructure unit at the European Commission, comes only two weeks after Brussels recognised four countries in Asia as having clearing house rules that were deemed “equivalent” to those for clearing houses in the EU. They were Singapore, Japan, Australia and Hong Kong.

Speaking at an annual Asia capital markets conference hosted by the Asia Securities Industry & Financial Markets Association (Asifma) this week, Mr Pearson said the commission was preparing to recognise a second wave of jurisdictions as part of its so-called “equivalence assessments”.

They included Canada, Mexico, India and New Zealand – but not yet the US, with which Europe has had difficult negotiations over mutual recognition of regulatory systems. Chris Giancarlo used his first speech in September as a commissioner at the Commodity Futures Trading Commission to call for a fresh approach from the US and warned against the stand-off deteriorating into local market protectionism.

Mr Pearson said the EU had no such issues with Asian jurisdictions. “We’ve been working very diligently, with long, deep engagement with Asian regulators,” Mr Pearson said. The commission is still assessing 12 jurisdictions.

The developments come amid increasing concern that transatlantic regulators are failing to co-ordinate and agree on ways to harmonise implementation of sweeping reforms of the over-the-counter (OTC) derivatives markets that were agreed by the G20 in 2009.

Ashley Alder, head of the Securities and Futures Commission, the Hong Kong regulator, sounded a note of pessimism at the Asifma conference by saying that watchdogs generally were “almost wholly focused on national regulation”.

Michael Voisin, derivatives partner at Linklaters, said the further recognition of more clearing houses was “encouraging” but added: “The continued omission of the US is, however, the main concern for everyone. The ideal outcome would be for regulators on both sides of the Atlantic to use the recent softening of tone from the CFTC as a springboard to work together to address problems caused by the extra territorial reach of both regulatory systems.”

Mr Pearson said that it was essential for key regulators to at least come to agreement soon on rules covering the potential failure of clearing houses, or central counterparties (CCPs).

There were five main systemically important CCPs globally, he said, with common clearing members which created interlinkages in the financial system.

“We have the luxury [of time] now to sort out these issues. If one of the globally important CCPs runs into trouble and we need to decide what to do, it will be too late,” Mr Pearson said. “There is a sense of urgency to use the luxury we have now to sort out the international basis for regulatory co-operation.”

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