The European Union's internal markets commissioner this week announced plans to push forward with the implementation of global derivatives regulations.

Internal markets and services commissioner Michel Barnier said it is time for regulators to implement the international standards set forth by the G20 and figure out how to provide deference to one another's rules. Toward that goal, Barnier said he will ask the European Commission to adopt so-called equivalence decisions, which will give central counterparties (CCPs) from five countries outside the bloc the ability to clear EU derivatives trades. The five jurisdictions Barnier is recommending are Japan, Singapore, Australia, Hong Kong, and India.

Barnier said his proposal will include “full deference” to the rules and supervisory regimes of the countries involved.

“This is the right way and the only way to regulate this global market,” Barnier said in a statement. “Decisions for other countries should follow shortly afterwards. I am confident that this will also include the USA whose CCPs are truly global market infrastructures.”

Barnier said technical talks with the U.S. Commodity Futures Trading Commission (CFTC) are making progress, adding that he believes both sides can reach agreement on outcomes-based assessments and margin requirements.

“If the CFTC also gives effective equivalence to third country CCPs, deferring to strong and rigorous rules in jurisdictions such as the EU, we will be able to adopt equivalence decisions very soon,” Barnier said.

On the heels of the financial crisis, G20 leaders agreed in 2009 to global reforms to the OTC derivatives market. The reforms are intended to boost transparency, reduce systemic risk, and guard against market abuse. The reforms backed by the G20 include provisions that all standardized contracts be traded on exchanges or electronic trading platforms and be cleared through CCPs; contracts which are not centrally cleared face higher capital requirements; minimum margining requirements be established; and all contracts for OTC derivatives be reported to trade repositories, according to the Financial Stability Board.

A progress report issued by the FSB in April indicated while much progress has been made on the reforms, regulators still need to solve implementation and cross-border issues. Jurisdictions need to undertake additional steps to clarify their processes for equivalency or comparability decisions, and to determine whether regulatory changes are needed to defer to other jurisdictions, the FSB said. The FSB said it will provide another update on the issue to the G20 by September.

Additional work is being conducted by the OTC Derivatives Regulators Group, which is tackling cross-border implementation issues which face the regulators.

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