In an exchange of letters between the Japanese FSA and the European Commission there is now some greater clarity about the future direction of OTC derivatives market.

The European equivalency test for clearing houses will be conducted based on an ‘overall outcome’ of the regulation rather than by a ‘rule by rule’ analysis. If a non-EU clearing counterparty (CCP) submits an application to the European Securities and Markets Authority (ESMA) by the 15 September, this CPP may continue to clear trades for EU financial institutions until ESMA decide on whether the institution will be recognised as complying with European regulations.

Link to letters on Japanese FSA website: http://www.fsa.go.jp/en/news/2013/20130801-1.html