The U.S. Commodity Futures Trading Commission may vote on interpretive guidance extending the Dodd-Frank Act to some overseas swap trading as soon as June 21, said sources familiar with the matter.
The question of whether Dodd-Frank should be applied outside the U.S. has been hotly debated for months. Industry groups appeared likely to convince regulators to limit the regulations’ reach, until JPMorgan’s May 10 announcement of a $2 billion loss on trades executed by its London office. The momentum then swung over to advocates of broader regulation, who used the loss to illustrate how much trades executed in other jurisdictions can impact the U.S. financial system. CFTC Chairman Gary Gensler. For instance, has repeatedly mentioned JPMorgan to support the need for oversight of overseas swaps.
That is not to say that are no longer any voices calling for regulatory restraint. Among these is CFTC Commissioner O’Malia, who wants a cost-benefit analysis carried out before the commission makes its decision, and warns that the CFTC must be careful not to stifle US competitiveness. At the moment, it appears more likely that overseas swaps will be subject to some degree of regulation by the CFTC, but the upcoming vote should clarify the CFTC’s intentions.