CFTC Chairman Gary Gensler's Remarks on Derivatives and the Cross-Border Application of Dodd-Frank Swap Market Reforms at the Institute of International Bankers’ Membership Luncheon
On June 14, 2012, CFTC Chairman Gary Gensler commented on the cross-border application of Dodd-Frank swap market reforms at the Institute of International Bankers’ membership luncheon. In the first half of his speech, Gensler made two forward looking statements:
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The CFTC is considering an international proposal to align margin requirements for uncleared swaps as well as reopening the comment period on their original margin proposal.
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Real-time reporting to the public and to regulators will begin starting as early as September of this year.
In the second half of his speech, Chairman Gensler outlined five issues regarding the cross-border application of swaps market reforms, which apply to those entities that have #8220;a direct and significant connection with activities in, or effect on, commerce of the United States.#8221;
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Foreign entities that transact more than a #8220;de minimus#8221; level of U.S. swap dealing would register under the CFTC’s swap registration rules;
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The staff recommendation includes a tiered approach for overseas swap dealer requirements, including both #8220;entity-level#8221; as well as #8220;transaction-level;#8221;
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#8220;Entity-level#8221; requirements would apply to all registered swap dealers, but in certain circumstance, overseas swap dealers could meet those requirements by complying with comparable foreign regulatory requirement, aka #8220;substituted compliance.#8221;
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#8220;Transaction-level#8221; requirements would apply to all U.S. facing transactions, which would include transactions with overseas affiliates that are guaranteed by a U.S. entity as well as affiliates operating as conduits for a U.S. entity’s swap activity.
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For certain transactions between an overseas swap dealer (including a foreign swap dealer that is an affiliate of a U.S. person) and counterparties not guaranteed by or operating as conduits for U.S. entities, Dodd-Frank transaction-level requirements may not apply.
View speech in full here(links externally to CFTC website).