Extraterritorial derivatives rules are threatening to drive buy-side firms away from the US market, while their clearing costs may increase, finds Dan Barnes.
Without well-defined cross-border derivatives trading rules,
buy-side firms are struggling to identify viable counterparties
for clearing, potentially increasing their costs further.
At a Futures and Options Association briefing with UK
regulators and the SEC held on 15 May 2013, Anthony
Belchambers, chief executive of the FOA summed up the concerns
of the buy-side.
"The buy-side wants to access foreign products on an
equitable basis and it is concerned that this [regulatory]
process may impact that. Asset managers are also concerned they
will have to meet the 'pass through' costs of incoherently
regulated cross-border business," he said.
"Their third concern is based on confusion over what
protections apply to them. If there is a collision of client
classification and investor protection rules governing cross
border business, it will be very difficult for them to see
where they stand."
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