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February 1, 2013

Barnier Tells EU Lawmakers in Letter Not to Block Swaps Rules

Michel Barnier, the European Union’s financial services chief, told lawmakers to drop a threat to block derivatives rules, saying the plan may harm the EU’s credibility and give its global competitors a boost.

Delaying the measures on over-the-counter derivatives trades “would have serious implications on our credibility visa-vis our international partners, at a time when key discussions on the cross-border application of rules on OTC derivatives are taking place,” according to a letter from Barnier, dated Jan. 30, and obtained by Bloomberg News.

Global regulators are seeking to toughen rules for the $639 trillion market for OTC derivatives, which became a target for oversight after the 2008 collapse of Lehman Brothers Holdings Inc., and the rescue of American International Group Inc. (AIG), two of the largest traders in credit default swaps.

The Group of 20 nations agreed in 2009 that standard types of OTC trades should be pushed through clearinghouses, and logged in repositories. The EU adopted legislation in 2012 to apply the international agreement and is now in the process of adopting technical rules to flesh out the law”

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Read full Bloomberg article here

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