Answer to IOSCO Task Force on Cross-Border Regulation
WFE and CCP12 support the development of international standards that rationalize the different jurisdictional approaches to cross-border recognition and focus on several key elements:
1. Measuring equivalence holistically by evaluating other aspects of regulation that have a material impact on the overall outcome or effect of any individual regulation.
2. Creating a transparent process for evaluating equivalence, including public consultations. This will facilitate constructive industry input and mitigate substantive and political delays.
3. The need for targeted relief where compliance is not possible due to conflicting home/host rules.
4. Effective transitional arrangements where gaps in recognition will disrupt the market.
Well-developed standards will promote a level playing field for markets and provide market participants with certainty regarding the status of exchanges and CCPs. This will reduce the fragmentation of liquidity, unnecessary costs to infrastructure or market participants, and risk of regulatory arbitrage.