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CFTC Chair and European Commission EVP Commend "Refreshing" Efforts on Clearing Framework

nihal.patel@cwt.com's picture
Commentary by Nihal Patel

In an op-ed in The Wall Street Journal, CFTC Chair Heath Tarbert and European Commission Executive Vice President Valdis Dombrovskis described recent action on regulation and supervision of DCOs.

Mr. Tarbert and Mr. Dombrovskis noted past disagreements between U.S. and EU regulators on clearinghouse supervision and regulation, but noted a "refreshing" of the dialogue and a determination to implement "clear, predictable and sound regulation and supervision for [DCOs]." The regulators cited recent steps taken by the European Commission ("EC") and the CFTC to provide for a more deferential framework as to DCOs primarily supervised in another jurisdiction. They also noted the COVID-19 pandemic as a reminder of the importance of a strong clearing framework - saying that "[clearinghouses] showed their resilience as they were tested by unprecedented market volatility this spring." (See here for previous coverage on the CFTC-adopted rule and see here for the EC regulation.)

Commentary

The op-ed is a nice signal from the regulators that they are looking to get past previous disagreements over cross-border supervision of clearinghouses. It was less than three years ago that the prior CFTC Chair published an op-ed in the same newspaper titled, "An EU Plan to Invade U.S. Markets," which was followed by warnings from two other CFTC Commissioners who remain at the agency.

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