On 5 July 2011, eight leading trade associations, including the International Swaps and Derivatives Association, the Global Financial Markets Association and the European Banking Federation, sent a letter to the US Treasury Secretary and the EU Internal Market Commissioner, warning them that diverging EU and US derivatives rules could substantially increase financing costs and “material risks” for companies and the wider global economy. The letter sets out a number of potential problems that could arise as a result of a lack of cooperation between the two regimes, and speculates on some solutions to these risks.

The Case for Non-Divergence

Counterparties based in the European Union and the United States often transact with each other, and it is therefore imperative that legal certainty and understanding imbues derivative transactions affecting both sides of the Atlantic.