U.S. Senate Committee on Agriculture, Nutrition and Forestry Chair Pat Roberts (R-KS) and Ranking Member Debbie Stabenow (D-MI) expressed support for CFTC Chair J. Christopher Giancarlo's strong commitment to the CFTC-European Commission ("EC") Equivalence Agreement.
In public statements concerning the possibility that the EU may overhaul the financial regulatory framework for derivatives clearinghouses, Chair Giancarlo asserted that cross-border deference should continue to be the approach to clearinghouse oversight. He characterized any unilateral change to the Equivalence Agreement as a "violation of trust and cooperation between the U.S. and Europe."
Senators Roberts and Stabenow echoed Chair Giancarlo's sentiment, and said that if the EC violates the Equivalence Agreement, the CFTC should "review the appropriateness of the exemptions and relief it has granted to foreign entities, including clearinghouses established in the European Union." They wrote that the Senate Agriculture Committee would support any CFTC efforts to conduct such a review.
Chair Giancarlo expressed gratitude for the support of the Senators and reiterated the "critical importance" of adhering to the terms of the Equivalence Agreement and maintaining cross-border deference as the "key principle" of clearinghouse supervision.
Commentary / Steven Lofchie
Given that financial activities are a global business, financial regulations can have a tremendous impact on global competition; i.e., on the ability of financial institutions based in one region to compete in another. When Dodd-Frank was adopted, Congress did not give due consideration to the potential negative effects that the statute and the implementing regulations could have on U.S. competitiveness. This was based perhaps on the mistaken assumption that other countries would follow along with whatever the United States did. During his tenure at the CFTC, now Chair Giancarlo has been consistent in expressing the view that financial regulations should not serve as impediments to global trade, and that regulators must be mindful that they do not adopt regulations whose strictures serve to strangle the economy. It is all to the good that his efforts to protect U.S. financial interests are drawing support from members of both parties. It would be even better if both parties would consider if there are other measures that they might jointly take to lessen regulatory burdens that impede the ability of U.S. financial institutions to compete or that discourage firms from conducting business in the United States.
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