Chairman of the CFTC, Gary Gensler’s final guidance proposal would call for an expansion of the CFTC’s power to regulate foreign branches of U.S. based banks and in certain situations, foreign banks as well. This proposed expansion pertains to the U.S. swaps market; if one party happens to be an international entity in an exchange of risk with a domestic entity, then the CFTC is granted authority.
According to the Wall Street Journal, there have also been rumors that the proposal would grant the CFTC sovereignty over any foreign transactions that involve a U.S. person, greatly increasing the CFTC’s reach as a financial regulator.
This push towards increasing regulative authority contrasts with the chairwoman of the Security and Exchange Commission, Mary Jo White’s speech during her General Membership Meeting of the Investment Company Institute.
In her speech entitled “Regulation in a Global Financial System,” White called for an environment of “collaboration and cooperation” with international regulators. White spoke of fostering a respect for international jurisdiction but a goal of having a comparable outcome with the Dodd-Frank Act.
Recently, foreign banks including Unicredit, Italy’s largest bank, have cut ties with the American swaps market. If put in place, it will be interesting to see what effects if any, Gensler’s final proposal will have on the relationship between the CFTC and international regulators.