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WorldNovember 3 2014

CFTC offers olive branch to Europe

The new commissioner of the Commodity Futures Trading Commission has pledged to replace existing regulation with more cross-border friendly rules. Will it be enough to reverse the fragmentation of the global market? 
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CFTC offers olive branch to Europe

Five years after the Pittsburgh G20 summit, a newly sworn in Commodity Futures Trading Commission (CFTC) commissioner has pledged to push for a rewrite of the CFTC swap execution rules, in a bid to avert a trade war between the US and Europe over derivatives clearing. In his keynote address at the Global Forum for Derivatives Markets, 35th Annual Burgenstock Conference, held in Geneva in September, CFTC commissioner J Christopher Giancarlo outlined what he called "the looming cross-Atlantic derivatives trade war: a return to Smoot-Hawley", and stressed the need for greater co-operation between regulators.

The issue stems, in part, from the European Commission's (EC) failure to recognise US-based central counterparties (CCPs) as equivalent to their European equivalent under the European Market Infrastructure Regulation (EMIR), as it reportedly plans to do for CCPs in India, Japan, Hong Kong, Australia and elsewhere. The omission is threatening to cause chaos in the industry.

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