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Orchestrating Harmony in regulations

Washington, December 2012

Statement by Commissioner Bart Chilton on Cross Border Issues, December 21, 2012: As we have set out to do from the beginning of the Dodd-Frank rulemaking process, we are cognizant of the need for regulators around the globe to harmonize rules to the extent possible in order to avoid market disruption and regulatory arbitrage.

In responding to a letter from Members of the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management, I pointed out that I expect the Commission will act imminently to ensure the following three broad objectives:

  • narrow the definition of U.S. person so that our extraterritorial reach is not too broad;
  • provide sensible aggregation requirements so that foreign banks won't automatically have to become U.S. swaps dealers just because they do business with foreign affiliates of U.S. banks;
  • provide for a phased-in compliance to July 2013 to allow time for other jurisdictions to implement derivative market reforms.

In addition, we must ensure that, in this interim period, U.S. swap dealers and major swap participants can avoid a Dodd-Frank compliance-related enforcement action by working to comply reasonably and in good faith.

Derivatives reform in the U.S. isn't taking place in a vacuum. And, regulators on several continents are moving at different speeds. Like an orchestra playing holiday music, not all sections of instruments necessarily start a number at the same time. Yet, they wind up in harmony. So too it must be in global financial reform. Ending up in harmony is critical to achieving our overarching purpose: making global financial markets safer, more transparent, and more effective.

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