Patrick informed us that the EU had conducted a ‘colonoscopy’ (his words) on the US DFA rules, in comparison to the EU EMIR rules. He noted that:

• There are 832 EU rules
• 622 pages of US rules
• 1622 pages of conflicts and gaps!

He then said there are three principals he wants to see followed:

1. Narrow application of the new regulations. He says he doesn’t see that the EU has the resources to enforce application of the EMIR rules onto branches of EU banks in foreign locations, e.g. a branch in New York. He also said he doesn’t see this as relevant or useful. [Of course if this were true then the EU may insist that EMIR is applied geographically, so branches of US firms in the EU must comply with EMIR, rather than Dodd Frank]
2. Wide application of mutual recognition. i.e. lets stay off each others turf
3. Absolute clarity that no action will be taken until the 1622 pages of conflicts are “sorted out”. He believes firms are faced with conflicted and overlapping rules.

Other notable points he made:

1. He asked his Mum how she would feel if a CCP like Eurex or LCH had to be bailed out. She’s said she’d heard about ABN Amro being supported by the state, but wouldn’t vote for the Prime Minister [not sure which country] again if they put a country into austerity for 20 years to pay for a CCP rescue. She also said she’d never heard of Eurex or LCH ;-)
2. The new individual segregation model from Frankfurt has moved LCH to offer something similar [seemed like a hat tip to Eurex]
3. December 14th is when the Basle committee meets to try and accept / endorse / agree on the margin rules for un-cleared trades. He foresees pastries flying during the discussions [my interpretation]
4. Timing of EMIR: Similar to David Lawton. Final rules on un-cleared margin, Q2/Q3 2013.