French banks struggle with swap conflicts

Fri Nov 9, 2012 2:24pm EST
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By Mike Kentz

NEW YORK, Nov 9 (IFR) - On the heels of an international meeting regarding the international reach of Dodd-Frank, French banks are leading the European charge to sound the alarm that specific disclosures set to hit in 2013 will force them to make certain representations to regulators that could leave them open to regulatory enforcement action.

Beginning January 1, French banks signing up to be swap dealers in the US will be asked to provide disclosures and allowances to the Commodity Futures Trading Commission that violate European privacy laws and French regulatory blocking statutes, either of which could leave the door open for enforcement action.

Lawyers at European banks say the CFTC has acknowledged the issue privately and so they have a degree of confidence the Commission will not overreach. But opinions are wide-ranging considering the CFTC's recent history.

"It's difficult to predict whether the CFTC would be willing to stretch its enforcement arms, if you look to the past they haven't been afraid to do so before," said Felix Shipkevich, partner at derivatives-focused law firm, Shipkevich.

"I think it's premature to say the agency definitely won't penalise foreign banks [for this], I think we're just going to have to wait and see."


As part of a global investigation into Libor fixing allegations, the CFTC recently settled with Barclays for US$200m for manipulating its submissions.   Continued...