EU Swaps-Clearing Clash

European Union (EU) delegates are unable to settle a dispute between Germany and the U.K. regarding derivatives-clearing competition, requiring the discussion to begin again on draft legislation. Ireland, which holds the EU’s rotating presidency, is looking to find middle ground on the initiative, which would create position limits in commodity derivatives and increase supervision of high-frequency trading.

Bloomberg reports that Michel Barnier, the EU’s financial services chief, has proposed overhauling the EU’s Markets in Financial Instruments Directive (Mifid) to counter “speculative trading activities” and implement agreements reached by the Group of 20 nations. Barnier’s plans would increase competition by forcing exchanges to hand over trade data to rival clearinghouses, so they are able to compete in processing derivatives transactions.

These data-access plans are supported by U.K. government, which would allow for greater competition that reduces costs for investors. Germany opposed, and argued that the move would break up markets and harm financial stability. Competition is the main issue in the debate, according to officials.

Ireland plans to start negotiations with the European Parliament regarding the measures, and the final version of the law must be agreed on by governments and by the EU assembly.

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