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The US Commodity Futures Trading Commission agreed in July this year on a common position with the European Commission and other global regulators that aimed to iron out differences in how they police derivatives trading worldwide. But in the months since that agreement was struck in principle, the parties have failed to sign off on the details of the arrangement. The CFTC, under pressure to adhere to Dodd-Frank legislation, has pushed ahead with enforcing its own, tough rules without waiting to coordinate.
Michel Barnier, the Frenchman in charge of European financial regulation, said he hoped to conclude an agreement with CFTC Chairman Gary Gensler in the months ahead, potentially before Gensler steps down at the end of the year. But he warned the current lack of clarity was starting to cause problems in financial markets, with liquidity in the derivatives industry breaking up and transaction costs rising. Without agreement on a common approach, including mutual recognition of each other's rules, it would be difficult to move ahead with the EU-US free-trade negotiations, which Europe expects to incorporate financial regulation, Barnier said.
Gensler, who has been criticised by some members of the CFTC board for taking an overly rigid line, is expected to step down in the coming months. Asked whether a change at the top might open the way for breakthrough with the EU, Barnier demurred. "I have a very good personal relationship with Gary Gensler", he said. "It's true that I sometimes get a little impatient, but I've never expressed my frustration."