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Michel Barnier, the EU’s financial services chief, was unable to broker a deal with the US Commodity Futures Trading Commission ahead of a budget stand-off that’s left many government offices shuttered. Gary Gensler, the CFTC’s chairman, has held firm on the October 2 deadline for SEFs to register with regulators, while the agency has granted temporary delays related to some other aspects of the swaps rules.
Barnier wrote to Gensler this week urging the US to delay the registration requirements until March to avoid disruptions in the $633 trillion global market and to give the EU time to complete work on its own legislation. He told Gensler the EU is concerned that its firms could face overlapping rules that ultimately could lead to a balkanisation of financial markets. Barnier’s spokeswoman Chantal Hughes said Gensler hasn’t yet replied.
“We can’t of course tell European companies exactly or directly what they should do with respect to the American rules, which are coming into force today”, Hughes said. “In practice, we don’t expect trading to stop overnight, but the effect is likely be less transparency, liquidity fragmentation and higher funding costs with potential impacts on the real economy”, Hughes said.