UAE hopes for boost from CCP equivalence with Europe

The UAE is hoping for a boost in cross-border trading having attained European equivalence for its central counterparties.

The European Commission deemed that rules for central counterparties, known as CCPs, both in the UAE and in the Dubai International Financial Centre (DIFC) matched European Union rules.

“The distinction will encourage cross-border activity between European clearing members and CCPs located in the DIFC by reducing the regulatory burden to participate in the market,” said a statement from centre’s regulator, the Dubai Financial Services Authority (DFSA).

Nasdaq Dubai, a central counterparty that facilitates equity and derivatives trading in the DIFC, welcomed the news.

“This international acknowledgement of the high calibre of DFSA’s regulatory regime will encourage further cross-border investment in Nasdaq Dubai equities and equity futures,” said Hamed Ali, chief executive.

Central counterparties facilitate trading by acting as counterparty to both buyer and seller, guaranteeing terms of trade even if one party defaults. They are often operated by banks as a means of promoting and stabilising securities trading.

The European Commission has also determined that rules governing central counterparties in India, Brazil, New Zealand and Japan Commodities are equivalent to those of the European Union, adding these regimes to a list of equivalent jurisdictions that includes Australia, Hong Kong, Singapore and others.

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