US clearing house OCC has praised European officials on their decision to extend a deadline for CCPs to be deemed qualifying central counterparties (QCCP).

Craig Donohue, chairman of the Chicago-based firm, said the move provides some "important breathing room" for the listed options industry.

CCPs are entities that sit in the middle of derivatives contracts, becoming the buyer to every seller and the seller to every buyer. 

Following the financial crisis, the G20 encouraged the clearing of derivatives trades, to reduce risk in the financial system.

That's because Basel III rules impose a capital charge on banks’ exposures to CCPs arising from certain transactions, including derivatives and securities financing transactions.

However, there are lower capital charges for banks’ exposures to a QCCP, as opposed to a non-QCCP. Hence the OCC's efforts.

Without the QCCP designation, OCC has said that its EU-affiliate clearing members' risk weighted asset exposures to OCC would increase to over $75bn from $924m.

That would require them to maintain additional capital of approximately $5.25bn.

A designation by a foreign regulator alone isn't sufficient for a bank to determine that a CCP meets the definition of a QCCP under the regulatory capital rules, but it can be presented as supporting evidence for lower capital charges. 

The deadline has been extended to December 15, 2016.