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The U.S. Commodity Futures Trading Commission should delay registration of swap-dealing units of overseas-based lenders, Societe Generale SA (GLE), France’s second- largest bank, and a lobbying association for international financial institutions told the agency.
The agency should delay requirements for swap-dealer registration, which may be triggered in October, until after the CFTC receives comments on a recent guidance proposal for how Dodd-Frank Act regulations will apply to foreign-based banks and units of U.S. banks operating overseas, Societe Generale said in a letter dated yesterday. Swap-dealers face the highest collateral, capital and business conduct standards under the law, which may be triggered in October.
“Our board is concerned that it may not be prudent to expose SG to new and extensive regulatory oversight if the extent of the oversight, and all applicable rules, are not known,” Societe Generale Corporate and Investment Banking’s Laura Schisgall, general counsel, and Mark Kaplan, chief operating officer, said in the letter. “To that end, SG urges the commission to delay mandatory swap dealer registration until there has been an adequate comment period on the proposals and the guidance has been issued in final form.”
The CFTC and Securities and Exchange Commission are required under the 2010 Dodd-Frank Act to write new regulations for the $648 trillion swaps market after largely unregulated trades helped fuel the 2008 credit crisis. The law is designed to have most swaps guaranteed at clearinghouses and traded on exchanges or other platforms to increase transparency.
Banks have spent two years lobbying against efforts to automatically apply Dodd-Frank to their overseas operations, saying doing so would hurt their ability to compete.
“Non-U.S. regulators have requested meetings with their home country-regulated firms in order to evaluate the scope and consequences of swap dealer registration obligations, and it is important to afford exemptive relief and additional time to permit such consultations to occur,” Sarah A. Miller, chief executive officer of the Institute of International Bankers, said in a letter to the CFTC. The group represents banks including Barclays Plc. (BARC) and Credit Suisse Group AG. (CSGN)
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