U.S. derivatives regulators should grant a more than five-monthdelay in registration requirements for European swap-trading platformsto avoid disruptions in the $633 trillion global market, saidMichel Barnier, the European Union's financial services chief.

The U.S. Commodity Futures Trading Commission (CFTC), which isrequiring swap-execution facilities (SEFs) to register by Oct. 2,should grant an extension to March 14 so the U.S. and Europe canreach a broader agreement on how to apply their respective rules tocross-border trades, Barnier said in a letter to Gensler datedtoday.

“In the absence of such relief, we risk a fragmentation ofliquidity pools due to the inability of non-U.S. venues to complywith the U.S. regime, both legally and operationally,” Barnier saidin the letter. “We have already witnessed that venues are beingforced to split their offerings into U.S. and non-U.S. tradingpools.”

The CFTC is overseeing the new platforms as part of an effortrequired under the 2010 Dodd-Frank Act to bring greater competitionand transparency to swaps traded by firms including Goldman SachsGroup Inc., JPMorgan Chase & Co., and Barclays Plc. Largelyunregulated trades helped fuel the 2008 credit crisis and led tothe $182.5 billion taxpayer-rescue of insurer AmericanInternational Group Inc.

Gary Gensler, CFTC chairman, has held firm on the Oct. 2deadline, while the agency has granted temporary delays related todata-reporting and enforcement responsibilities of SEFs. Threepartial delays were announced on Sept. 27.

A SEF proposed by Bloomberg News parent Bloomberg LP is amongvenues—including those from IntercontinentalExchange Inc.,MarketAxess Holdings Inc., and Javelin Capital Markets LLC—thathave won temporary approval from the CFTC, according to theregulator's website.

Financial lobbying groups including the International Swaps andDerivatives Association and the Securities Industry and FinancialMarkets Association's asset management group have pressed the CFTCto grant delays in the requirements.

The European Banking Federation trade group said the CFTC andEuropean regulators need to make further progress on aligning rulesfor swap-trading platforms.

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.