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Derivatives

Third-country equivalence throws up clearing uncertainty

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Foreign counterparties that fall under the scope of European Markets Infrastructure Regulation could find that derivatives transactions priced as OTC are retrospectively eligible for clearing under third-country equivalence rules, according to lawyers. It means that participants could be entering OTC trades at different pricing levels compared to those trades eligible for clearing, while finding later that they will also have an obligation to clear that OTC trade.

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