Comprehensive new EU and U.S. measures to regulate over-the-counter (“OTC”) derivatives are progressing ever closer to full implementation. EMIR entered into force in the EU on 16 August 2012, with the clearing obligation expected to take effect by the end of the year. In the U.S., the Dodd-Frank Act requirements are being implemented, with dealer registration and other requirements expected to begin in the third and fourth quarters of 2012. Both measures have some degree of extraterritorial application, and long-awaited CFTC guidance on Dodd-Frank’s extraterritorial scope has now been proposed. In the absence of agreement between the U.S. and EU regulators, extraterritoriality has the potential to cause intractable and irreconcilable conflicts for the derivatives industry. This note sets out some of the situations in which extraterritoriality is likely to result in such conflicts.
View full memo, "OTC Derivatives Regulation and Extraterritoriality II"