Statement of Support

Chairman Gary Gensler

June 29, 2012

Phased Compliance

I support the proposed release on phased compliance for foreign swap dealers. The release provides phased compliance for foreign swap dealers (including overseas affiliates of U.S. swap dealers) of certain requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

Such phased compliance would enable market participants to comply with the Dodd-Frank Act in an orderly fashion. It would allow time for the CFTC to receive public comment on interpretive guidance on the cross-border application of the Dodd-Frank Act.

Under the interpretive guidance, in certain circumstances, market participants may comply with certain Dodd-Frank requirements by complying with comparable and comprehensive foreign regulatory requirements, or what we call “substituted compliance.” The release on phased compliance also allows time for the CFTC, foreign regulators and market participants to continue to consult and coordinate on regulation of cross-border swaps activity, as well as the appropriate implementation of substituted compliance.

In this period, foreign swap dealers must file a plan demonstrating how they will eventually comply with Dodd-Frank, which in certain circumstances could be through substituted compliance.

The release provides for phased compliance in the following manner:

  • Foreign swap dealers would be required to register with the CFTC upon the compliance date of the registration requirement;
  • U.S. and foreign swap dealers must comply with transaction-level requirements with U.S. persons, including branches of U.S. persons;
  • For transaction-level requirements, foreign swap dealers, as well as overseas branches of U.S. swap dealers, transacting with non-U.S. persons is phased for one year.
  • Entity-level requirements (other than reporting to SDRs and large trader reporting) that might come under substituted compliance is phased for one year; and
  • For foreign swap dealers, swaps with U.S. persons, including branches of U.S.

• persons, would be required to be reported to a SDR or the CFTC.

In addition, U.S. swap dealers’ compliance with certain internal business conduct requirements is phased until January 1, 2013.

The release addresses comments from U.S. and international market participants, and I look forward to additional input on the proposal.

Last Updated: June 29, 2012