February 12, 2014
I thank Acting Chairman Wetjen for calling this meeting to begin discussions regarding the impacts of the Commission’s cross-border guidance and the staff’s notorious November 14 advisory further expanding our jurisdiction over swaps trading by non-U.S. persons.
As I have consistently stated, the Commission must collaborate with foreign regulators to increase global harmonization of swaps regulations.1 The international community has worked together to develop consistent standards for the capital and margin requirements for OTC swaps.2 However, in other areas, such as data reporting, the Commission has failed to provide a clear path forward for market participants and foreign regulators. Today is the first day of trade reporting in the European Union (EU) and the Commission still has not recognized the EU reporting regime for substituted compliance purposes.
I remain optimistic that the Commission will work with foreign regulators to quickly resolve the outstanding issues and rely on a comparability process rather than imposing the U.S. regime globally. Today’s meeting is a positive step in working with foreign regulators to develop a solution to limit the extraterritorial application of the Dodd-Frank Act to foreign transactions that “have a direct and significant connection”3 with the U.S. and to begin discussions about the comparability of foreign regulations.
1 Statement of Dissent by Commissioner Scott D. O’Malia on Comparability Determinations, December 20, 2013, available at http://www.cftc.gov/PressRoom/SpeechesTestimony/omaliastatement122013.
2 In September 2013, the Basel Committee on Banking Supervision and the Board of the International Organization of Securities Commissions published their final policy framework with respect to margin requirements for non-cleared derivatives. This paper is available at https://www.bis.org/publ/bcbs261.pdf.
3 Section 2(i) of the Commodity Exchange Act states in part that the Dodd-Frank Act shall “not apply to activities outside of the United States unless those activities – (1) have a direct and significant connection with activities in, or effect on, commerce of the United States ….”. 7 U.S.C. 2(i).
Last Updated: February 12, 2014