EU's Barnier Is Confident of Swaps Deal With U.S.
By REUTERS
Published: July 10, 2013 at 11:25 AM ET
WASHINGTON — The European Union is confident it can end a rift with the United States over how to write common rules for financial derivatives, the bloc's top bank regulation official said on Wednesday.
The issue could come to a head this week, as the U.S. derivatives
regulator needs to decide by Friday how its rules for the $630 trillion
(£421.74 trillion) swaps industry apply to foreign companies that want
to deal with U.S. businesses.
Brussels has openly complained in the past about the aggressive view of
the Commodity Futures Trading Commission's chairman, Gary Gensler, who
insists on a broad application of U.S. rules to foreign companies.
But Michel Barnier, who is due to meet Treasury Secretary Jack Lew and
other top U.S. officials in Washington next week, said the two sides
were close to an agreement.
"I am confident in our joint capacity, in our very strong relationship,
to reach an agreement between America and Europe, including the topic of
derivatives and technical standards for derivatives," Barnier told a
news conference.
At stake is the CFTC's so-called cross-border guidance, which would
impose cumbersome regulatory requirements on foreign companies,
something Europe and Asia say is redundant because they are drawing up
similar rules themselves.
The issue has not only split Europe and America: it is also far from
clear whether Gensler will succeed in gathering the required three votes
from his fellow commissioners in favour of the plan at a meeting
scheduled for Friday.
Friday is the last day the CFTC can decide as a broad temporary relief
for foreign companies expires, and having no rule in place would cause
regulatory chaos and invoke the wrath of already critical politicians.
The rules include trading requirements such as registration and data
reporting and would make swaps markets less opaque after the 2007-09
credit meltdown, and prevent risk affecting U.S. companies from building
up abroad.
Reuters first reported that Barnier was closing in on a deal with
Gensler - something that could be a powerful bargaining chip for the
former Goldman Sachs banker to push the plan through the divided
commission.
The stakes are high, with banks heavily lobbying against new rules to
rein in the lucrative market, dominated by Wall Street banks such as
Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co.
Big foreign banks such as Deutsche Bank AG, Credit Suisse Group AG and
Barclays Plc feared they would have to deal with the cost of both U.S.
rules and those from their home countries.
(Reporting by Douwe Miedema; Editing by Maureen Bavdek)
COPY http://www.nytimes.com/reuters
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