Several U.S. financial industry trade associations are asking U.S. derivatives regulators for a further delay in the application of new rules governing swaps in cross-border transactions, in order to give international regulators more time to harmonize their rules.
The collection of lobby groups — including the Futures Industry Association (FIA), American Bankers Association (ABA), the Institute of International Bankers (IIB), the International Swaps and Derivatives Association (ISDA), and the Securities Industry and Financial Markets Association (SIFMA) — have asked the Commodity Futures Trading Commission (CFTC) for a six-month extension of an order postponing the application of the CFTC’s swap rules to cross-border transactions.
That order, which was issued in December, is set to expire on July 12. In the letter, the lobby groups argue that a six-month extension would provide more time for international regulators to coordinate their efforts to establish a global framework for regulating derivatives, and for market participants to consider the implications of the U.S. Securities and Exchange Commission’s (SEC) recent cross-border proposals, which differ from the CFTC’s approach in several respects.
CFTC commissioner, Scott O’Malia, has issued a statement supporting an extension of the exemption to Dec. 31. “An extension would serve several purposes. It would allow the commission to develop a more workable final guidance that can be adopted when it is ready, not rushed to completion due to an artificial deadline. It would allow much-needed additional time for the commission and international regulators to continue their ongoing cooperative efforts to harmonize the global regulatory framework,” he said.
“These efforts depend on other jurisdictions finalizing their remaining rules, and the commission and international regulators agreeing on and implementing a workable regime of substituted compliance and then making determinations pursuant to this regime. All of these processes require more time. Furthermore, an extension would allow time to improve coordination on our cross-border rules with the SEC,” he added.
“The commission’s cross-border interpretation undoubtedly will have a significant effect on global markets and market participants. Given all that is at stake, and given the looming July 12 deadline, it is imperative for the commission to have a viable backup plan; failing to do so would be utterly irresponsible,” he warned.