Bloomberg: Wall Street bid on cross-border swaps quashed by US regulator

15 November 2013

CFTC has moved to close off large banks' ability to avoid new regulation by arranging trades in America and then booking the deals in overseas affiliates.

Lawyers 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 tough US regulations, passed in the 2010 Dodd-Frank Act. CFTC Chairman Gary Gensler has fought for more than four years to extend his agency’s reach, arguing that US taxpayers could be on the hook for overseas blow-ups due to the global nature of the business.

The new guidance “significantly expands the CFTC’s cross-border jurisdiction", said Annette L Nazareth, a partner at the Davis Polk & Wardwell LLP law firm in Washington. “It also immediately throws into doubt the viability of many trading arrangements used by banks worldwide.”

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