CFTC Chair J. Christopher Giancarlo warned of the potential negative effects of European regulatory changes on U.S. financial markets.
In an Opinion/Commentary in The Wall Street Journal, Chair Giancarlo argued that as a result of Brexit pushing London financial markets outside of the European "regulatory umbrella," the European Commission is proposing to delegate regulation of non-European Union entities to the European Central Bank ("ECB") and the European Securities and Markets Authority ("ESMA"). Chair Giancarlo is concerned that U.S. financial institutions would now be subject to European regulatory oversight. In particular, he is concerned about potential European Commission regulations that might allow ESMA to conduct on-site inspections of U.S. businesses, like the Chicago Mercantile Exchange, without informing the CFTC.
Chair Giancarlo asserted that such regulatory measures would negatively affect U.S. markets, and potentially "dry up the capital necessary for growth and job creation." Chair Giancarlo argued that "overlapping" regulation inhibits growth, and said that U.S. acceptance of European regulation would represent a "dangerous precedent." The "rules-based" European approach contrasts with the "principles-based" U.S. approach, he said, and so any imposition of additional burdens is the "last thing" that the American economy needs.
CFTC Chair J. Christopher Giancarlo cautioned that any unilateral change to the CFTC-EC Equivalence Agreement would be viewed as a violation of trust between the U.S. and Europe.
The CFTC issued two separate actions concerning the application of its swap rules in certain cross-border scenarios.