The Commodity and Futures Trading Commission (CFTC) voted 3-2 on Monday to approve a rule that makes it easier for foreign regulators to access U.S. swaps data.
The vote specifically addressed indemnification agreements that would make foreign regulators liable for any costs associated with lawsuits over shared information. Now, in certain cases, the indemnification agreements will not be required.
The new plan comes as the CFTC is under fire from foreign regulators over the way new swaps rules would apply abroad. The issue, known as extraterritoriality, has proven to be one of the toughest challenges for regulators looking to avoid a repeat of the 2008 financial crisis. The approved plan will ease some extraterritoriality concerns by making it easier for foreign firms to access U.S. swaps data.
“The Commission concludes that the confidentiality and indemnification provisions should not operate to inhibit or prevent foreign regulatory authorities from accessing data in which they have an independent and sufficient regulatory interest,” said the CFTC in a statement.
“With this interpretive guidance, the Commission has taken another important step to ensure appropriate access to SDRs by foreign regulatory authorities consistent with the provisions of the Dodd-Frank Act,” said a statement issued by CFTC chairman Gary Gensler, who supported the rule. Commissioners Bart Chilton and Mark Wetjen also supported the rule.
Dissent at the CFTC
In a dissenting statement, Comissioners Scott O’Malia and Jill Sommers voiced concern that the approach to data sharing overly restricts domestic regulators from examining swap market data.
“All other U.S. Regulators (i.e. “Appropriate Domestic Regulators”) would have to execute an indemnification agreement—something that we are told they are prohibited from doing,” said O’Malia and Sommers in their statement. “Instead, the Commission has purposely chosen to interpret the statute in a manner that constrains other domestic regulators’ ability to examine swap market data. For these reasons we cannot support the guidance issued today by the Commission.”