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By Douwe Miedema
WASHINGTON (Reuters) - The European Union will soon push back a deadline by which U.S. clearing houses need to comply with its rules, a source familiar with the matter said, taking the sting out of a dispute with America over how to regulate swaps.
The deadline will be postponed until June 15, 2015, from Dec. 15, said the source, asking not to be named. Reuters first reported in September that Brussels was considering a delay, but such a move was not a foregone conclusion.
A European Commission spokeswoman told Reuters on Tuesday that an extension of the Dec. 15 deadline had been proposed, and that the EU was hopeful it would be adopted shortly.
The delay is coming after months of negotiations failed to produce a breakthrough in how to reconcile swaps rules across international jurisdictions.
The U.S. Commodity Futures Trading Commission, run by Chairman Tim Massad, requires foreign-based clearing houses - which stand between buyers and sellers of derivatives to reduce risk - to meet U.S. rules when they do business here.
In return, Europe after the deadline will stick to its own rules for U.S. clearing houses rather than exempting them as it has done for countries such as Japan, Hong Kong and Australia.
The impasse had added uncertainty for U.S. clearing houses. Without a deal in which the United States and the EU formally recognised each other's rules, European banks would have needed to hold far higher capital buffers for deals cleared through U.S. firms. Those banks could take their business to clearing houses in countries recognised by Europe.
The CFTC declined to comment.
The delay that is due to be announced will be the second such move, and if the conflict still isn't solved after June 15, even longer delays were possible, the source said.
"If needed, we'll just do it another time, and another time, and another time, until we get enough deference from the United States of America," the source said.
European Commissioner Jonathan Hill, who took over the dossier from his predecessor, Michel Barnier, in November, had not changed the EU's point of view, the source said.
Big clearing houses are run by LCH.Clearnet, owned by the London Stock Exchange (L:LSE), Eurex, owned by Deutsche Boerse AG (DE:DB1Gn) and by two U.S. companies, the CME Group (O:CME), and the Intercontinental Exchange (N:ICE).
(Reporting by Douwe Miedema; Editing by Karey Van Hall and Jonathan Oatis)