| WASHINGTON, July 5
WASHINGTON, July 5 The top U.S. derivatives
regulator will meet next week to vote on how its rules apply to
foreign companies that want to do business with U.S. firms, a
sign it may be nearing a compromise on a thorny issue that has
invoked the wrath of foreign regulators.
The Commodity Futures Trading Commission announced a formal
meeting for July 12 to decide how new rules it has written to
regulate the $630 trillion swaps markets apply to companies
The issue has split the CFTC for many months as it started
writing new rules to rein in the lucrative swaps market,
dominated by banks such as Citigroup Inc, Bank of America
Corp and JPMorgan.
Chairman Gary Gensler, a Democrat who is widely expected to
leave when his term expires at the end of the year, has insisted
foreign companies comply with the CFTC's rules if they want to
do business with U.S. companies.
The rules are an effort to make the opaque derivatives
market safer after the financial crisis, and prevent risk that
affects U.S. companies from building up abroad. But banks have
complained it would subject them to cumbersome and redundant
And European Union financial services czar Michel Barnier
has said America should rely on similar rules that are being
drawn up in other jurisdictions, after a 2009 global agreement
to rewrite the rules for banking.
U.S. banks complained last year that foreign clients started
defecting as it was unclear whether they needed to comply with
the CFTC's rules. Banks fear they will lose more customers if
the regulator can reach no compromise.
The last day the agency can resolve the issue is July 12,
because a broad exemptive relief it granted foreign companies
expires on that day.
One commissioner, Bart Chilton, said he welcomed what he
said was "an appropriate compromise." Chilton is also a
Democrat, and his vote for any proposal was not in doubt.
Mark Wetjen, the third Democrat and a key vote for any
majority Gensler aims to clinch, has sounded less sure and asked
for a delay in a speech last week.
"I am confident we can get to agreement on the guidance, but
not sure we can accomplish that before July 12," Wetjen said on
a conference call with journalists this week.
In its invitation for the meeting, the CFTC said that it
would discuss both its final guidance on how its rules apply
abroad, as well as a new order that would set deadlines in a
phased approach for compliance.