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SIFMA today released the following response from Kenneth E. Bentsen, Jr., president, to remarks given today by Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler at the Sander O'Neil Global Exchange and Brokerage Conference.
"Derivative markets are global in nature, and as such regulators here and abroad must work together to ensure national rules are consistent and coordinated at a global level. The CFTC's cross-border guidance, as proposed, is overly prescriptive, in conflict with other U.S. and foreign regulations, and does not recognize the changes in financial markets regulation and oversight overseas from five years ago to today.
"With all due respect to Chairman Gensler, the major U.S. registered swap dealers are now regulated at both the holding company and functional level, which was not the case five years ago. Additionally, unlike five years ago, all jurisdictions are moving toward centralized clearing for most derivatives. Basel III and 2.5 have also increased capital standards and U.S. and foreign regulators are working jointly on new margin requirements.
"The G20 Principles called for a commitment to higher capital, central clearing and margin for derivatives, but most importantly, coordination across all jurisdictions. In a post G20 world, where Dodd-Frank, EMIR and MiFID are in the process of being completed, the CFTC's cross border rules complicate the regulatory landscape, walk away from our commitment to the G20, and risk retaliatory efforts from other jurisdictions that would undermine the entire market.
"The CFTC must recognize that regulation of the derivatives market is very different from a year ago, let alone five years ago. The Commission should also recognize the concerns of Congress, from both sides of the aisle, that fear the CFTC is going too far in its application of regulations across our borders.
"The CFTC should agree to Commissioner O'Malia's recommendation and provide extended relief until the Commission can develop a more workable final guidance."
