Chairman Jeb Hensarling

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H.R. 1256 Calls for the CFTC and SEC to Work Together
Posted by on June 10, 2013

On Wednesday the House will consider H.R. 1256, the Swap Jurisdiction Certainty Act.

The Problem:

Swaps are uniquely tailored financial products traded globally (cross-border) by a variety of industries to manage risk. Under the Dodd-Frank Act, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are responsible for regulating swaps trades in which a U.S. person is a party to the transaction.

But while Dodd-Frank’s plain language makes clear that Congress intended new swaps regulations to apply outside the U.S. only in certain limited circumstances, the comments and actions of U.S. regulators – particularly the CFTC – indicate they are considering regulations that would result in new swaps rules being applied more broadly than Congress intended.

The Consequence: 

Action by the CTFC or SEC to unilaterally enforce uncoordinated regulations on cross-border swaps would put U.S.-based companies at a needless disadvantage to their international competitors.

The Solution: 

H.R. 1256 calls for the SEC and the CFTC to work together and harmonize their rules relating to swaps transacted between those in the U.S. and those abroad while ensuring regulators employ a thorough and deliberate process in determining when to apply U.S. swaps rules in foreign markets and to foreign firms.

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