Exclusive: U.S. swap regulator close to deal on cross-border rules - source

Wed Jul 10, 2013 11:32pm EDT
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By Douwe Miedema

WASHINGTON (Reuters) - The top U.S. derivatives regulator is within reach of a compromise over how its rules apply to foreign companies dealing with U.S. banks, a source close to the negotiations told Reuters.

Friday is the last day the Commodity Trading Futures Commission (CFTC) can decide on the issue, as a broad temporary relief for foreign companies expires. Having no rule in place would cause regulatory chaos and invoke the wrath of already critical politicians.

The issue has split the commission, pitting Chairman Gary Gensler against a fellow Democrat, Commissioner Mark Wetjen, who wants the agency to rely more on foreign regulators.

But the two were now close to a deal, the source said.

"It looks very positive, there's agreement in principle on most of the major issues," the source said.

"To (Gensler's) credit and to Mark's credit they were able to get in a room together over several days and we all knocked this out," the source added.

Still, important detail needed to be ironed out in the coming days, the source stressed.

Gensler has insisted foreign companies comply with the CFTC's new rules to prevent risk abroad from hitting America, while foreign regulators had said the agency should rely on similar rules being drawn up in Europe and Asia.   Continued...

Gary Gensler, chairman of the Commodity Futures Trading Commission, speaks to a reporter at the Sandler O'Neill + Partners, L.P. Global Exchange and Brokerage Conference in New York, June 6, 2013. REUTERS/Brendan McDermid