Risk Desk editor John Sodergreen interviewed CFTC Chair J. Christopher Giancarlo on the regulation of cross-border swap transactions.
Mr. Giancarlo observed that Asian markets have "warmly accepted" the principles laid out in his recently issued white paper, specifically, the principle of regulatory deference whereby regulators defer to comparable rules adopted by other countries. He expressed concern that rules being considered by European regulators "ignore certain principles of comparability and rule deference." Mr. Giancarlo argued that if the United States is freeing American firms operating in Europe to do so under EU law, then Europe should do the same with respect to European firms operating in the United States, and allow them to comply with U.S. law. Mr. Giancarlo made clear that unless Europe follows "a regulatory deference approach" to cross-border transactions, he will not hesitate to employ the "tools" available to U.S. regulators so that the Europeans "fully understand U.S. resolve" on the matter.
Mr. Sodergreen commented on the dramatic change of position by the United States on the issue. He contrasted Chair Giancarlo's position with the position of the United States six years ago, which involved attempting to "force-feed the rest of the world with U.S. derivatives market rules which featured no flexibility and no compromise."
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