Summary of Key Issues from EU Derivatives Published Proposal

September 21, 2010

After more than a year of incubation, the European Commission finally released a draft proposal of its derivatives legislation on September 15th, 2010. By and large, the proposal harmonizes with the U.S. Dodd-Frank bill with several notable exceptions including classification of companies into regulated and exempt entities.

The EU derivative regulation works in conjunction with several other pieces of EU legislation including the AIFM, CRD, and MiFID to form a comprehensive regulatory framework. The AIFM and the derivative regulation proposed today are still subject to final approval in the EU. While the CRD and MiFID are subject to review and potential revisions to bring them in line with the G20 spirit of more regulation for the derivatives market.

Although, the final shape and form of European derivative regulation will not be known until the end of 2012, the broad principals and outlines are in place and clients would benefit from understanding and preparing for the coming regulatory changes that could have significant impact on their business.



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