The US, stung by the 2008 bailout of AIG after losses at its London derivatives arm, is seeking broad authority to police foreign trading that puts domestic taxpayers at risk. The hardline approach has riled Brussels and governments in the EU and Asia, who fear the US move will scupper global efforts to harmonise rules and will force banks to navigate overlapping and at times contradictory rules. Wall Street banks are also fighting expanded US authorities.
Gary Gensler, chairman of the Commodity Futures Trading Commission, is pushing to finalise the guidance before an exemption for foreign market participants expires on July 12, imposing the rules more widely. “I think we’re on a path to finalise the guidance by July 12, but if we don’t, it’s not a mandated provision from Dodd-Frank”, the financial reform law passed in 2010, he said.
The European Commission urged the CFTC to extend the exemption until leaders of the Group of 20 countries have agreed international principles on cross-border swap rules. Otherwise, “EU firms would face huge legal and operational uncertainty”, said the letter signed by Steven Maijoor, chair of the European Securities and Markets Authority, and Jonathan Faull, head of the European Commission department handling financial services.
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