U.S. derivatives regulators, after spending more than a year debating swaps rules for Goldman Sachs Group Inc., Deutsche Bank AG and other trading firms, will meet today with European and Asian officials to resolve differences over the rules’ international reach.
If the regulators can’t agree, they risk missing an end-of-year goal for reducing risks in the $648 trillion global swaps market.
The CFTC has been facing criticism from overseas regulators since it proposed guidance in June about the international scope of its Dodd-Frank rules. The agency’s guidance determines when regulations apply to foreign-based companies trading with U.S. clients and to branches of U.S. companies trading overseas. The reach of the rules has prompted opposition from JPMorgan Chase & Co., Goldman Sachs, Bank of America Corp. and Societe Generale SA.
“There is going to be enormous pressure for him to compromise,” Christian A. Johnson, professor at the University of Utah law school and author of a paper on the potential for regulatory arbitrage because of cross-border rules, said in a telephone interview on Nov. 5. “Industry will turn on him and international regulators have already turned on him. I don’t know how he will continue to stonewall them.”