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US regulator calls for reforms in cross-border rules


According to Market Intelligence, December 2022


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US regulator calls for reforms in cross-border rules

The U.S. Commodity Futures Trading Commission will soon publish a white paper that seeks to recalibrate the agency's approach in regulating the cross-border swaps market, CFTC Chairman Christopher Giancarlo told an audience in London, Reuters reported Sept. 4.

Giancarlo said the new CFTC cross-border rules would focus better on addressing systemic risks from foreign firms to the U.S. financial system and would leave the supervision of trading practices and market structures like clearing houses to their home office.

The regulator's pledge came on the back of its criticism of the overreach in supervision in a draft EU law that would give EU regulators a role in supervising U.S.-based clearing houses that service customers in the bloc.

Giancarlo said the proposed EU law encroaches on CFTC's turf and should be amended, saying the EU should defer to the CFTC when it comes to supervising American clearing houses.

"I have been pretty firm with our friends in Brussels; the notion that there would be two sets of hands on the steering wheel is not something that we would support," Giancarlo said Sept. 4.

He said the CFTC was also guilty of overreach by regulating firms not based in the U.S. but did business with it. This "overly expansive, unduly complex" approach has shown insufficient deference to other countries even though they comply with the same international standards applied in the U.S. He said the white paper will seek to address these deficiencies.

Giancarlo said an approach based on deference when it comes to margin, trading venues, clearing houses or other areas was essential to ensuring a strong and stable derivatives market.