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Trans-Atlantic Swaps Rift Spurs Concerns

Gap between EU, U.S. timing on collateral rules could rupture $493T market.

By Silla Brush, Bloomberg | Updated on June 14, 2016

The European Union’s decision to postpone collateral rules for swaps is putting pressure on U.S. regulators to follow suit to avoid rupturing the $493 trillion market dominated by the world’s biggest banks.

The European Commission, the EU’s executive arm, said last week it won’t be able to meet a September deadline set by the U.S.—and laid out as goal by global regulators—for standards that seek to ensure banks have sufficient collateral to backstop transactions done directly with other traders. Europe plans to complete the regulations by year-end, though they may not take effect until mid-2017, according to the commission in Brussels.

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