Implementation of the Markets in Financial Instruments Directive (MiFID) II is roughly 15 months away, and with it comes a burning question: Will the US and Europe be able to come to a mutual recognition of regulations for the swaps market?
Douglas Friedman, general counsel for Tradeweb Markets, said the problem originates from assumptions by many that because the U.S. started earlier than Europe on swaps trading reform, European regulations would largely mirror what the U.S. did.
The two sides have fundamental differences in how they’re approaching getting better transparency in the market, according to Friedman. In Europe, the focus is on data and size threshold; in the U.S., it’s based on protocols.
“In the absence of some mutual-recognition regime and some level of harmonization, there are going to be some real issues come January of 2017,” said Friedman at SEFCON VI in New York. “When you think about a U.S. person who is sitting in Europe ─ Where do they trade? How do they trade? ─ I think it’s going to really be a tall order. I think that’s why the regulators have struggled so much to find common ground, because, frankly, they look at it differently.”
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