Reuters: Regulatory News: EU, Japan urge U.S. regulator to curb cross-border reach

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EU, Japan urge U.S. regulator to curb cross-border reach Oct 19th 2012, 15:25 LONDON | Fri Oct 19, 2012 11:25am EDT LONDON Oct 19 (Reuters) - Britain, France, Japan and the European Union have called on the United States to limit the cross-border reach of its new derivatives rules to avoid fragmenting markets at a time of economic weakness. Leaders from the Group of 20 major economies agreed in 2009 at the height of the financial crisis to introduce rules that require the clearing and reporting of derivatives trades by the end of this year to boost transparency and better spot risks. Rules proposed by the U.S. Commodity Futures Trading Commission (CFTC) could bring dealers outside the United States within their scope. British finance minister George Osborne and his French and Japanese peers Pierre Moscovici and Ikko Nakatsuka, as well as EU financial services chief Michel Barnier, have written a joint letter to CFTC chairman Gary Gensler, asking him to limit the cross-border influence of his regulations. "At a time of highly fragile economic growth, we believe that it is critical to avoid taking steps that risk withdrawal from global financial markets into inevitably less efficient regional or national markets," the letter dated Oct. 17 said. Instead, countries should recognise each others' rules, meaning the CFTC should rely on European or Japanese authorities for regulating derivatives activities involving U.S. firms outside the United States. A U.S. reform of Wall Street, known as Dodd-Frank, could require swap dealers outside the United States to seek authorisation from the CFTC if one of the counterparties to a derivatives contract is a "U.S. person", meaning an individual or firm. Several countries have already called on the United States to rethink another part of Dodd-Frank - the Volcker Rule, which bans deposit taking banks from taking bets on the market - fearing it would crimp government debt trading abroad. Link this Share this Digg this Email Reprints

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