WASHINGTON, D.C. – U.S. Senate Committee on Agriculture, Nutrition, and Forestry Chairman Pat Roberts, R-Kan., and Ranking Member Debbie Stabenow, D-Mich., sent a letter of support to U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo for his commitment to honor mutually recognized equivalency agreements regarding cross-border clearinghouses.
Prior to the United Kingdom’s 2016 referendum to leave the European Union (“Brexit”), the CFTC and the European Commission (EC) reached a unanimous and bipartisan agreement on cross-border clearinghouse oversight, resulting in strong oversight while still providing firms the flexibility that is needed in the global derivatives marketplace.
Post-Brexit, the EC proposed a major overhaul of its financial services regulatory framework, threatening the 2016 CFTC-EC agreement while empowering European regulators with broad and duplicative supervisory authority over U.S. clearinghouses.
“Failure to abide by the terms of the 2016 CFTC-EC agreement would call into question the credibility of the process that has been undertaken cooperatively by the CFTC and the EC in recent years, particularly given the agreement was finalized less than two years ago,” Roberts and Stabenow write. “We support your efforts to ensure a universal solution that recognizes the respective supervisory authorities of the CFTC and the EC, and encapsulates the principles set forth in the CFTC-EC agreement. Disjointed regulatory activities will serve no market, and will only cause undue stress.”
“In a recent speech, you stated that any unilateral change by European authorities would be a violation of trust and cooperation between the U.S. and Europe. We agree with that assessment. If the EC moves away from the 2016 CFTC-EC agreement, the CFTC should review the appropriateness of the exemptions and relief it has granted to foreign entities, including clearinghouses established in the European Union. The CFTC has existing authority to initiate such review, and we would support your efforts if you deem them appropriate and necessary.”
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