CFTC Delays Cross-Border Derivatives Ruling Date, Bowing to UK Pressure

London-based trading firms ask CFTC for more time before proposed implementation of restrictions on derivatives trading in Europe which were scheduled for March 24

The regulatory wranglings concerning the US Commodity Futures Trading Commission (CFTC)’s potential imposition of restrictions on derivatives trading in Europe which had been scheduled for inception on March 24.

In a report by the Wall Street Journal, it was indicated that those in the know had understood that regulators and trading platforms in the United Kingdom recently urged the CFTC to move the deadline back to March 24.

To this effect, according to the Wall Street Journal’s source, the CFTC is likely to further postpone such restrictions which would serve to ease tensions with overseas counterparts as policy makers and government departments in jurisdictions critical to the financial sector continue to work toward unified regulations for derivatives trading, including cross-border rulings for OTC derivatives.

With Japan’s Financial Services Agency (JFSA) having issued proposals on its perspective as to how to implement a standardized set of regulations for derivative trading worldwide, and European Commissioner Michel Barnier concurring with this rationale in the advent of MiFID II, the actual execution of aligning many nations, and even continents, with a single set of stipulations is indeed proving to be a long, drawn out and bureaucratic affair.

As far as the CFTC’s proposal is concerned, European trading platforms would be able to accept trades from U.S. firms after March 24 only if they certify they follow certain transparency and other rules that mirror the CFTC’s. Some London-based trading firms have told CFTC officials that they now need more time to comply with that deadline.

No firms have so far filed paperwork with the commission indicating they are regulated like U.S. trading platforms, according to CFTC Acting Chairman Mark Wetjen last week. Although it is difficult to speculate on the date that will be decided, it has been proffered to the Wall Street Journal that it could be around July 1 this year.

Whilst it is most certainly apparent that there is alignment among many global regulatory authorities regarding the concept of creating a framework for oversight of all markets based on similar parameters, finalizing such a mammoth task in such a way that it protects investors and corporations alike is no simple task.

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