MNI POLICY: BOE/CFTC Unveil Post-Brexit Derivatives Accord

--Derivatives 'Agreement' Ensures Post-Brexit Continuity Of Arrangements

By David Robinson

     LONDON (MNI) - The UK and U.S. have unveiled a framework designed to ensure

continuity of derivatives trading after Brexit, explained Monday by Mark Carney,

Governor of the Bank of England, Financial Conduct Authority head Andrew Bailey

and Christopher Giancarlo, Chairman, U.S. Commodity Futures Trading Commission.

     The following are the key policy points from their trio's press conference:

     --The agreement was widely expected, with Giancarlo saying that "many

assumed the U.S. and UK would work things out." Monday's events appeared to be

an exercise in  boosting market confidence with the March 29 deadline for a

EU/UK withdrawal deal looming. Carney said that the aim of the joint statement

by UK and U.S. authorities "is to reassure derivatives markets that derivative

activity will continue to function smoothly ... whatever form Brexit takes."

     He added that "fragmentation ... is in no one's economic interest."

     --Asked if the deal with the CFTC and the UK authorities added anything to

existing arrangements Giancarlo said "this is about continuity." The aim is to

keep derivatives going as at present rather than do anything to alter it, at

least initially, after Brexit.

     European Central Bank Governor Mario Draghi and Carney led a joint EU, UK

working committee which agreed on a 12 month period under which derivative

contracts could be serviced under existing rules. The UK/CFTC agreement is

another step on the road of continuity and reassurance.

     -- FCA head Bailey set out the key points of the deal. He said that it

would ensure that U.S. and UK dealers would be able to trade on each others

platforms and would ensure that UK and CFTC margin rules would continue to be

comparable. The detailed statement said that existing regulatory reliefs will be

granted by the CFTC to EU firms at the point of UK withdrawal from the EU.

     The CFTC will issue "no action letters" allowing UK firms to rely on a

range of CFTC staff reliefs including broker registration, swap data reporting,

and the trading and clearing of inter-affiliate swaps.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: M$B$$$,M$E$$$,M$U$$$]