The world's biggest banks won a break from the Securities and Exchange Commission (SEC) that allows them the ability to arrange some deals within the U.S. without having to comply with the country's trading regulations.
The SEC proposal would let overseas-based dealers of swaps use personnel located in the U.S. to set up trades without having to comply with the Dodd-Frank Act regulations. The agency's five commissioners on Wednesday voted unanimously to open the proposed rule to public comment.
The measure would give banks a pass from U.S. requirements that those trades be guaranteed at clearinghouses and conducted on swap-execution facilities designed to increase price competition and transparency.
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The SEC said in a summary of the proposal that the "counterparty credit risk associated with these transactions resides primarily outside the United States." The proposal would apply to single securities or narrow indexes, which make up about 5 percent of the swap market.
The largest swaps dealers, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., have lobbied regulators and Congress to curb the authority of U.S. regulators, arguing that the tougher rules make them less competitive with foreign banks.
Cross-border application of U.S. derivatives rules is one of the most contentious features of the Dodd-Frank Act, the regulatory expansion enacted after the 2008 credit crisis.
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