CFTC Chair Massad Discusses Cross-Border Issues
At the CME Global Financial Leadership Conference, CFTC Chair Massad spoke about cross-border challenges and various regulatory reform initiatives at the CFTC.
After first addressing the CFTC's mandate under Dodd-Frank generally, and outlining certain of his "core principles," Chair Massad highlighted the "cross-border challenge" faced by the CFTC. In particular, Chair Massad focused on clearing and clearinghouse oversight across borders. Chair Massad explained that he believes that the proper model for clearinghouses would require dual registration and cooperative oversight among regulators. Chair Massad looked to the existing CFTC oversight of European clearinghouses in the futures context as the "model on which the market has grown to be global."
With regard to swaps trading, Chair Massad defended the CFTC's regulatory approach, stating that "whatever fragmentation may have arisen is largely a result of the fact that the [United States] imposed rules on an unregulated, highly mobile trading market long before other jurisdictions did." Chair Massad also stressed that the CFTC "has a lot to do" with respect to the harmonization of swap data reporting across borders.
See: Chair Massad's Speech.
Related news: European Commission Adopts First "Equivalence" Decision for Central Counterparty Regulatory Regimes (with Lofchie Comment) (October 30, 2014).
Commentary
Chair Massad's speech should be read together with that of CFTC Commissioner Mark Wetjen (covered here). Chair Massad stressed his belief that the proper model for clearinghouse regulation across borders is "dual registration and cooperative oversight," while Commissioner Wetjen argued that the CFTC should – as a general matter – continue to embrace a policy of substituted compliance through mutual recognition and appropriate deference.
Despite the Commissioners' difference of opinion, it is clear that the Commission is devoting a significant amount of attention to cross-border issues and working with its counterparts abroad.