Global regulators need a better system of mutual recognition and coordination to ensure adequate oversight of financial markets such as the $648 trillion swaps market, according to a coalition of 11 financial-industry lobbying associations.
“The rules, processes and priorities of regulatory authorities continue to be largely geographically based and governed by differentiated national laws,” the EU-US Coalition on Financial Regulation said in a 65-page report. “This has resulted in a complex and costly meld of duplicative and sometimes conflicting regulations.”
The group includes industry trade associations that represent JPMorgan Chase & Co. (JPM:US), Goldman Sachs Group Inc. (GS:US) and Credit Suisse AG (CSGN) as regulators seek to revamp oversight of a market that helped fuel the 2008 credit crisis. The Commodity Futures Trading Commission, the main U.S. derivatives regulator, is planning June 21 to release guidance on the international reach of Dodd-Frank Act rules to branches and subsidiaries of U.S. banks.
The group said that global regulators should keep rules “broadly in line” and that requirements for “full or strict equivalence by a host state could be tantamount to closing its domestic market to overseas participants and narrowing customer choice.”
The group includes the Securities Industry and Financial Markets Association, Futures Industry Association, Swiss Bankers Association and the Association of Financial Markets in Europe.
CFTC chairman Gary Gensler said last week that global regulators may propose international swap-collateral standards by mid-July to prevent financial firms from exploiting rule differences between countries.
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