CFTC's Giancarlo hits out at cross-border swaps oversight

Commissioner Christopher Giancarlo has slammed his own agency over apparent failures to coordinate cross-border regulation of the global swaps market.

On Thursday the US Commodity Futures Trading Commission (CFTC) announced two additional delays for Wall Street banks over their cross-border derivatives operations.

“The Commission has repeatedly failed to coordinate effectively with foreign regulators to ‘implement global standards’ in financial markets as agreed to by the G-20 leaders,” stated Commissioner Giancarlo.

The CFTC has postponed its policy to adhere bank’s overseas affiliates to US oversight several times. In 2014, the agency was taken to court by the Securities Industry and Financial Markets Association (SIFMA) over its authority to regulate cross-border swaps transactions.

While the court found in favour of the CFTC, it did order it to draw up a cost-benefit analysis of certain cross-border rules, which it also released on Thursday.

However, Commissioner Giancarlo believes the CFTC has failed in its attempts to regulate cross-border transactions and harmonise its rules with overseas regulators.

“The CFTC’s and European Union’s (EU) tortured and repeatedly delayed central counterparty clearinghouse equivalence process is a stark example, as is the EU’s recent decision to postpone until 2017 new rules setting collateral requirements for uncleared derivatives,” he added.

“The CFTC must do better to work with foreign regulators to implement global standards consistently in a way that ensures a level playing field and avoids market fragmentation, protectionism and regulatory arbitrage.”