The Commodity Futures Trading Commission (CFTC), accused by a top broker in off-exchange financial derivatives of wanting to regulate the world, said on Tuesday new rules will inevitably reach beyond its borders to police the $460 trillion market.
Regulators across the globe face an end of year deadline to turn pledges made by leaders of the G20 group of the world's biggest economies to regulate the market, which is dominated by about 15 major banks such as Goldman Sachs, Deutsche Bank and Morgan Stanley who mostly trade in London and New York.
Under the proposed new rules banks and other users of these derivatives like credit default swaps and interest rate swaps will have to trade on an electronic platform, and clear and report the trades to make markets more transparent and contain risks.
Last week CFTC chairman Gary Gensler said London was a light-touch regulatory "loophole" being exploited by U.S. banks to conduct off-exchange derivative trades and it needed closing with rules from the United States so that taxpayers won't be asked to bail out a U.S. firm that fails there.
His comments raised hackles in Europe where the industry is worried about having to comply with both EU and U.S. rules.
But Ananda Radhakrishnan, the CFTC's director of clearing and risk, told the IDX derivatives conference in London on Tuesday the U.S. Dodd-Frank reform of Wall Street forces it to have regard to overseas markets that have an impact on the United States.
Read more: http://www.reuters.com/article/2012/06/26/us-derivatives-regulation-idUSBRE85P0Y520120626
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