Regulators from the European Union and Japan warned U.S. regulators last week that the domestic market would be put at risk if American regulators did not coordinate regulatory efforts with foreign territories.
Rep. K. Michael Conaway (R-Texas), the chairman of the House Agriculture Committee’s subcommittee on general farm commodities and risk management, held a congressional hearing to determine the challenges facing regulators around the world.
“If we do not get our Dodd-Frank rules right, American end-users, who use swaps to manage everyday business risks, may have fewer counterparties to deal with,” Conaway said. “Fewer counterparties will mean less competition and less liquidity in the market, which will lead to higher costs and a higher concentration of risk in the United State. With our economy facing an uncertain future, we can ill-afford to implement reforms without a good faith attempt to cooperate with the international community.”
Rep. David Scott (D-Ga.) said that failure to issue coordinated rules could be damaging for American firms.
“The consequences of poor sequencing of rules and implementation dates by the CFTC, and poor coordination both with other domestic regulators and foreign regulators as well, are real and damaging to U.S. companies,” Scott said. “As we saw earlier this year domestic banks can and will lose business to foreign competitors if Title VII rules are not implemented properly and in a timely fashion, and that will in turn harm the end-user companies they serve and that we on this committee care so very much about.”
Witnesses at the hearing included Bart Chilton and Jill Sommers, both commissioners on the CFTC, as well as Masamichi Kono of Japan’s Financial Services Agency and Patrick Pearson, the head of the European Commission’s market infrastructure unit.