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 The 28-country bloc and the United States are locked in negotiations
over recognizing each other's rules for trading derivatives such as
interest rate swaps.
The rules are being introduced after the 2007-09 financial crisis
highlighted how the hitherto opaque markets accentuated
uncertainties for markets.
The EU's European Securities and Markets Authority (ESMA) said on
Monday it was proposing to broaden the bloc's rules for third party
agencies, known as clearing houses, that stand between two sides of
a trade to ensure its smooth completion.
A transatlantic deal has stumbled over a key difference whereby the
United States requires only a one-day "liquidation period" for
margin or cash to back trades.
The EU requires a two-day period, a difference critics say ties up
far more capital.
ESMA said it was proposing that both systems could be used in the EU,
a step that would make it possible for the bloc to recognize U.S.
rules as being "equivalent" in terms of strictness to the bloc's
system.
"Overall, ESMA believes that the drawbacks do not outweigh the
benefits to introduce such type of account structure in the European
regulation to ensure a level playing field with other
jurisdictions," the EU watchdog said in a statement.
"In addition, to limit the risks that a reduction of the liquidation
period might have for central counterparties, they should collect
intraday margins," ESMA added.
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The watchdog will consult with the industry on the draft change
before sending a final proposal to the EU's executive European
Commission for approval into law later this year.
Banks based in the European Union would have to hold more capital
against trades cleared through non-EU clearing houses whose rules
are not deemed to be equivalent.
The Commission on Friday extended until June the grace period for EU
banks to continue using U.S. clearing houses without having to hold
extra capital.
Monday's announcement follows a discussion paper issued by ESMA in
August after it became clear the United States was not going to
change its own rules, insisting they are better.
(Reporting by Huw Jones; Editing by Mark Potter)
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