Boozman, Durbin Introduce Legislation to Bolster CFTC's Authority to Review Exemptions for Entities in Foreign Jurisdictions Seeking to Regulate U.S. Clearinghouses
Nov 25 2019
WASHINGTON– U.S. Senators John Boozman (R-AR) and Dick Durbin (D-IL), senior members of the Senate Committee on Agriculture, Nutrition, and Forestry, introduced legislation directing the U.S. Commodity Futures Trading Commission (CFTC) to review cross-border regulatory relief, exemptions and approvals for entities in foreign jurisdictions attempting to supervise U.S. clearinghouses.
“Clearinghouses are key components of our financial markets and are integral to U.S. financial stability. Our bill prompts the CFTC to use its existing tools to protect U.S. financial market regulation and safeguard our clearinghouses from duplicative and burdensome regulations. It is only appropriate that the CFTC uses its authority to review its relief, exemptions and approvals provided to foreign entities should foreign regulators in those jurisdictions attempt to impose new supervision standards for our clearinghouses,”Boozman said.
“Our bill empowers CFTC’s authority to review exemptions and approvals to foreign entities that seek to regulate U.S. clearinghouses. This is a bipartisan effort to help strengthen our commodity marketplaces and protect the critical financial functions U.S. clearinghouses provide,” Durbin said.
The U.S. and the European Union (EU) currently operate under an equivalence agreement finalized in 2016. This agreement treats U.S. and EU regulations that govern clearinghouses (CCPs) as equivalent, allowing for CCPs in each jurisdiction to be primarily regulated by their home country.
In response to Brexit, the EU is launching an overhaul of its regulatory framework for financial services. The EU regulatory framework, known as EMIR 2.2, provides new supervisory powers to the European Securities and Markets Authority (ESMA). EMIR 2.2 allows ESMA to impose European requirements and extensive, direct, supervisory oversight on U.S. clearinghouses.
The Boozman-Durbin legislation calls on the CFTC to review relief, exemptions and approvals provided to the relevant foreign entities if the EU or another foreign entity attempts to regulate U.S. clearinghouses.
The House Agriculture Committee included similar language in its CFTC reauthorization legislation that passed unanimously in October.