New York financial firms would move jobs overseas if the U.S.grants the industry's request to exempt companies' foreign branchesfrom some Dodd-Frank Act rules, said Gary Gensler, chairman of theCommodity Futures Trading Commission.

“If we accept their approach — that they say, 'No, don't covertheir London branches' — the jobs will go overseas, but the riskwill be back here,” Gensler said today in an interview on BloombergTelevision.

JPMorgan Chase & Co. and Goldman Sachs Group Inc. are amongU.S. firms to argue that applying Dodd-Frank rules to theiroverseas branches or subsidiaries would threaten their ability tocompete with foreign-based rivals. Imposing the law's marginrequirements on non-U.S. swaps would “eviscerate our ability toserve clients overseas and cede the global market,” JPMorganAssociate General Counsel Don Thompson said at a House hearing Feb.8.

The CFTC is set to propose guidance on June 21 on how the U.S.may govern the international reach of Dodd-Frank rules onderivatives, people familiar with the plan have said.

The CFTC also is planning an order providing overseas-based swapdealers and some affiliates of U.S. banks as much as a year tocomply with all of Dodd-Frank regulations, Gensler said in a speechprepared for an Institute of International Bankers' conference inNew York. The delay may affect compliance with capital and somerisk management regulations, Gensler said.

Overseas Compliance

Overseas swap dealers would still be required to register withthe CFTC and report trades to swap data repositories, Gensler said.The CFTC is seeking to have a system for allowing compliance withoverseas regulations substitute for Dodd-Frank rules.

Regulators are also seeking to complete rules this year forexchange trading.

“We need to bring the same transparency to the swaps market thathas existed for decades in the securities and futures market,”Gensler said in the interview today. “That means that end users cansee the bids and the offers, and it broadens competition.”

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