EU Commissioner Barnier Seeks U.S. Swaps Deal (with Lofchie Comment)

In a speech before the Eurofi Financial Forum, Vice President of the European Commission Michel Barnier explained that the European Commission is engaged in "near daily discussions" with the CFTC and Chair Massad to find a solution with U.S. regulators to the application of rules for swaps clearinghouses.

Mr. Barnier stated that both the European Union and the United States must work together to ensure that the rules are applied in a "consistent and coherent way." He noted that "it takes two to tango," and that the "American side must also deliver."

Mr. Barnier went on to say that he will work for increased trust and workable solutions "until the last day" of his mandate, which is in October. In a separate interview, he said he hopes to have an agreement before the December 15, 2014 deadline for EU banks to face tougher capital rules.

Aside from derivatives, Mr. Barnier noted other areas where the "cross-border angle" needs to be developed, including in bank resolution, common global standards for securitizations, international financial reporting standards and the global insurance sector.

Lofchie Comment: By the comments of the EU Commissioner, the strain between the CFTC and European regulators is evident. It is imperative that Chair Massad find a way for the United States to come to terms with European regulators if there is to be a coherent system in place.As to the daily conversations taking place between European regulators and the CFTC noted by the EU Commissioner, it is reasonable to wonder how the CFTC asserts such dominant expertise that it is unable to trust a European regulator (or market participants) to assess the relative quality of U.S. versus European clearing corporations. Historically, the CFTC is not a systemic risk regulator. There is no reason to believe that the CFTC's expertise in the assessment of clearinghouse risk is superior to that of its European counterpart.

See: Mr. Barnier's Speech. Related news: EU Commissioner Barnier to Accept Clearing Rules from Five Countries outside EU, but Not the United States (with Lofchie Comment) (June 30, 2014).