In a letter dated April 18 to Treasury Secretary Lew, representatives of the UK, Brazil, France, Germany, Italy, Japan, Russia, South Africa and Switzerland, along with European Commissioner for Internal Market and Services Michel Barnier, urged the United States to limit the cross-border reach of swaps rules related to the Dodd-Frank Act.
The letter began with the following sentence: “We, the undersigned, are writing to express our concern at the lack of progress in developing workable cross-border rules as part of reforms of the OTC derivatives market.” The letter went on to say that the global financial markets were fragmenting because of the proposed U.S. regulations.
Lofchie Comment: How often do the U.K. and Russia get together to write an angry letter to the United States?
That non-U.S. customers will simply refuse to trade with U.S. firms because of the burdens imposed on customers, directly or indirectly, by Dodd-Frank, should be a serious concern for U.S. regulators. The CFTC should do a market study (it can be a small one) and hire an independent research firm to ask non-U.S. customers about their views on the U.S. swaps markets. If the non-U.S. customers do not believe that Dodd-Frank improves the U.S. markets and makes them more attractive to trade, that should be worrisome. The United States is not helped if we destroy our position as the global center of finance.