Report to the G-20 Meeting of Finance Ministers and Central Bank Governors (with Lofchie Comment)

The principal authorities with responsibility for the regulation of the over-the-counter ("OTC") derivatives markets in Australia, Brazil, the European Union, Hong Kong, Japan, Ontario, Quebec, Singapore, Switzerland and the United States, issued a report discussing the reform of the OTC derivatives market.

Here is the key paragraph in the report:

"The principals also recognise that conflicting or inconsistent cross-border application of rules to market participants, intermediaries, infrastructures and products may inhibit the execution or clearing of certain cross-border transactions or impose additional compliance burdens. The principals further recognise that regulatory gaps may present risks to financial markets and provide the potential for regulatory arbitrage."

Lofchie Comment: The report reads like a negotiated peace treaty between the CFTC and the rest of the world or, if not a treaty, at least a statement that the warring parties make before entering into treaty discussions. As a practical matter, I would think this statement gives some hope that the CFTC will delay implementing any final cross-border "guidance" until it has negotiated further understandings with non-U.S. regulators and, hopefully, the SEC.

View Report in full here (links externally to CFTC website).See also: Press Release.For a compilation of recent news items on cross-border issues, link to Current Topics - Extraterritorial.