ISDA CEO Scott O'Malia highlighted potential issues affecting derivatives trading obligations following Brexit. In the absence of an equivalence determination, he said, European Economic Area (EEA) counterparties risk losing access to an important source of liquidity that may result in fragmentation. He also warned that there were trading venue and potential conflict of laws issues.
He encouraged (i) coordination between UK and EU regulators and (ii) mutual recognition of trading venues.
ISDA previously urged regulators to issue equivalence determinations. Recently, Andrew Bailey of the UK Financial Conduct Authority made similar recommendations.
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