On February 24, the International Swaps and Derivatives Association Inc. (ISDA) published Principles for US/EU Trading Platform Recognition (Principles), which set out certain key principles and policy considerations that ISDA believes should facilitate comparability determinations and mutual recognitions between US and EU execution platforms. Notably, the Principles are primarily addressed to the US Commodities Futures Trading Commission (CFTC) in respect of the CFTC’s comparability assessment of the EU regulatory framework applicable to regulated markets (RMs), multilateral trading facilities (MTFs) and organized trading facilities (OTFs).
The Principles encourage the CFTC to adopt a broad, outcomes-based approach informed primarily by the core principles for swap execution facilities (SEFs) set out in the US Commodity Exchange Act and to assess the SEF core principles against the goals and outcomes of applicable EU laws and regulation, rather than focussing on technical, rule-by-rule differences. To demonstrate this point more fully, ISDA included in the Principles a table analyzing the SEF core principles against the regulatory requirements contained in the amended Markets in Financial Instruments Directive, the Markets in Financial Instruments Regulation, the Market Abuse Regulation and the European Market Infrastructure Regulation for RMs, MTFs and OTFs.
ISDA urged the CFTC to develop a “registration-lite” approach to the trading venues above, and noted that the CFTC should look to the principles set out by the International Organisation of Securities Commissions (IOSCO) Final Report on Cross-Border Regulation, when making comparability determinations.
ISDA’s Principles can be found here.
ISDA’s accompanying press release can be found here.
IOSCO’s Final Report on Cross-Border Regulation can be found here.