Banking & Financial Institutions

Warren: Don’t delay on cross-border derivatives rules

{mosads}A deadline is approaching to deal with this issue. On July 12, a temporary exemption the CFTC crafted to relieve banks of the new requirement while rules were drafted will expire. Several CFTC commissioners have said that relief should be extended to give the group more time to grapple with the issue.

But such a delay may also push the debate out of Gensler’s grasp, as he may reportedly be leaving the agency this summer. His term officially expired in April, but he can continue leading the CFTC through the year if no replacement is named. A former Goldman Sachs executive, Gensler has emerged as one of the fiercest critics of Wall Street among the administration’s financial regulators, and Warren praised him Thursday as a “tough and faithful negotiator on behalf of the American people.”

Under a proposal released in 2012, foreign branches that do more than $8 billion of derivatives trading with U.S. banks would have to register with the CFTC and play by the same rules as U.S. firms. But those rules have yet to be finalized, despite Gensler’s prodding to get it done.

But some CFTC commissioners have said the matter is complex and merits further study, and European regulators have expressed concern with the idea of U.S. regulators taking an oversight role on institutions within their borders. Banks and other financial institutions have also bristled at the idea of U.S. regulations following their overseas activity.

Meanwhile, some lawmakers are making their own push to slow the CFTC’s reach abroad.

The House, with bipartisan support, has passed legislation that would require foreign nations to be exempted from the new derivatives rules so long as they have similar requirements. Warren has announced her opposition to the effort, and so has the White House.

“We can’t live in a world where … after all the time and energy that we spent trying to get in place real derivatives regulation, [we say] ‘Oh never mind, guys, just pen a post office box abroad and keep up with your risky activities,’ ” Warren said. “If there’s a giant loophole that lets the business move overseas where it’s not so well-regulated, then there will be too much risk in this market.”


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