Contact

Co-operation for clearing OTC derivatives: ESMA and the FSB

Back to top

Co-operation for clearing OTC derivatives: ESMA and the FSB

An agreement has finally been struck between the United States of America and the European Union (announced on 10 February 2016) with regards to equivalence and the regulatory recognition of Central Counterparties, also known as CCPs, mandated to clear OTC derivatives, on a cross-border basis. This long awaited agreement will certainly pave the way for the rest of the world in terms of CCP equivalence.

17 Feb 2016 2 min read Finance and Banking Article

In South Africa, a press release published by the Financial Services Board (FSB) on 3 February, has confirmed that the European Securities and Markets Authority (ESMA) have entered into a Memorandum of Understanding (MoU) with the FSB. The MoU (effective as of 30 November 2015) records that ESMA will co-operate with the South African regulators with respect to Central Counterparties. The MoU is established under the European Market Infrastructure Regulations (EMIR). It sets out the co-operation arrangements, including for the exchange of information, regarding the regulation of Central Counterparties which have been established and authorised or recognised in South Africa (under our Financial Markets Act) and which have applied for EU recognition under the EMIR Regulations.

EMIR does provide for co-operation arrangements between ESMA and non-EU authorities (such as the FSB), provided those non-EU jurisdictions have a legal and supervisory framework for Central Counterparties which have been deemed equivalent to EMIR by the European Commission. This MoU recognises that South Africa’s rules for the recognition and supervision of Central Counterparties is equivalent to the regime provided for under EMIR. Local Central Counterparties established under the FMA will therefore be able to provide clearing services to clearing members or trading venues established in the European Union.

This MoU demonstrates a step by the two regulatory bodies to work together to reduce the burden of conflicting CCP regulations which have extra territorial effect including for South African market participants in the OTC derivatives space.

The next regulatory step for South Africa is to finalise the June 2015 version of the draft regulations to the Financial Markets Act (which deal with recognition of foreign Central Counterparties and generally deals with the qualifying criteria and ongoing compliance obligations of a Central Counterparty). The mandatory clearing of OTC derivatives is one of the regulatory changes which South Africa must make as part of the country’s G20 commitments. However, as at the date of publication, these regulations are still in draft form.

The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages. Please refer to our full terms and conditions. Copyright © 2024 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us cliffedekkerhofmeyr@cdhlegal.com.

You might also be interested in

19 Nov 2024

by Desmond Odhiambo, Daniel Kiragu and Nicholas Owino

Key highlights from the Court of Appeal’s ruling on defamation and responsible journalism

The Court of Appeal has reinforced critical principles in defamation law and the standards of responsible journalism in its decision in Ongwen and Five Others v Omollo and Six Others (Civil Appeal 133 & 150 of 2018) KECA 1444 (KLR), clarifying the duty of care journalists owe when reporting on sensitivematters.  

Dispute Resolution

4 min read

16 Jul 2024

by Veronica Connolly

International Arbitration: A comparison of the rules of selected arbitration institutions in Africa and Europe

Traditionally, many disputes involving African parties have been resolved by international arbitration at key arbitral centres in Europe. However, Africa also boasts well-established international arbitration institutions, and contracting parties have the choice of a wide range of arbitral institutions that provide specialised arbitralservices. 

International Arbitration

2 min read

18 Mar 2024

by Imraan Abdullah and Kelo Seleka

The soon to be ‘new’ preferential procurement framework

In addition to regulating public procurement generally, the long title to the Procurement Bill states that the Bill is meant to prescribe a framework within which preferential procurement must be implemented. Of course, this must be so, because the Constitution requires national legislation be enacted to provide for such a framework. It is important to note, however, that in as much as national legislation must prescribe a framework, the prerogative power to create and implement a preferential procurement policy within that framework remains with the individual organs of state and institutions. This was confirmed by the Constitutional Court, and is something that cannot be taken away from procuring entities by the Procurement Bill.

Dispute Resolution

6 min read

9 Jul 2024

by Nomlayo Mabhena-Mlilo

A prudent question is one half of wisdom: The consequences of business email compromise on individuals | Part 2

Modern day technology has afforded people the luxury of convenience. However, with this increased convenience has come an upsurge in cybercrime attacks against law firms, banks, individuals and other institutions. The most common forms of attack are ransomware attacks, hacking and phishing scams. In the first part of this alert, titled A prudent question is one half of wisdom: The consequences of business email compromise on banks and attorneys , we discussed the case of Hartog v Daly and Others (A5012/2022) ZAGPJHC 40; 2 All SA 156 (GJ) (24 January 2023), in which an attorney fell victim to fraudsters who intercepted email communication and provided false banking details. This resulted in the attorney making payment into a fraudulent account without further questioning the change in the details, leading to a claim against him by the rightful recipients of the funds, which claim was upheld by a full court. In this article, we discuss the case of Edward Nathan Sonnenberg Inc v Hawarden (Case no 421/23) ZASCA 90 (10 June 2024), in which the Supreme Court of Appeal (SCA) considered the liability of a law firm in respect of a claim for pure economic loss caused by an alleged negligent omission.

Dispute Resolution

4 min read

2 Apr 2024

by Jackwell Feris, Timothy Baker and Veronica Connolly

Early Detection of Fraud and/or Corruption in Arbitrations: Lessons from the Recent English Court Decisions?

Two recent English Commercial Court decisions serve as a warning to dishonest parties hoping to exploit the arbitral process to obtain or enforce fraudulent or corrupt arbitration awards. The English courts generally follow a non-interventionist approach when it comes to the challenge of enforcement of arbitral awards. However, these recent decisions signify that the Commercial Court can and will use its statutory powers to intervene, investigate and order disclosure to uphold the legitimacy of the arbitral process and parties’rights.  

Dispute Resolution

7 min read

9 May 2024

by Albert Aukema, Jose Jorge and Taigrine Jones

Constitutional Court clarifies when retrenchments are merger specific

South Africa faces one of the highest unemployment rates in the world. This is the primary reason that the Competition Commission (Commission) must consider the effect on employment (as part of its public interest assessment) when evaluating a proposed merger. It has become standard practice in South Africa when there is a merger for restrictions to be imposed by the competition authorities – especially in respect of retrenchments.

Competition Law

6 min read

This website uses cookies to enhance the browsing experience. For more information, please see our Cookie Policy.

Accept Decline