The European Commission is urging the CFTC to reconsider the measure that Chairman Gary Gensler argued is vital to prevent US companies from evading regulations by booking transactions through affiliates based in other countries. The EU and US have repeatedly clashed over the global reach of US swaps rules, amid European Commission warnings that the extraterritorial reach of CFTC requirements leaves European banks facing overlapping demands and extra costs. The EU authority and the CFTC sought to ease tensions with the July agreement, which sets out a series of understandings and plans for further work.
Of the dozens of derivative rules being completed by the CFTC, the most contentious have involved how to oversee swaps traded across borders. The biggest banks sometimes trade half their swaps with overseas clients.
Gensler has sought to extend US authority to those transactions, arguing that the global nature of the 2008 credit crisis proved that American taxpayers could be at risk when banks book them in foreign units. Lawyers have said the new policy gives the CFTC a greater reach to police the swaps market and makes it harder for banks to keep trades away from regulations passed in the 2010 Dodd-Frank Act.
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