Industry groups, including SIFMA, the FIA, and the FSR submitted a joint comment letter to the SEC regarding SEC rulemaking proposals relating to cross-border security-based swap activities, reporting of security-based swaps, and registration of SBSDs and MSBSPs. While the industry groups stated support for many elements of the SEC’s proposal, the letter highlighted two significant concerns including:
- The lack of harmonization with the CFTC’s cross-border approach; and
- SEC’s proposed “conducted within the United States” test.
On the harmonization point, the comment letter said that, while the trade associations viewed the CFTC rules and guidance as materially flawed rules, now that those rules were in place, the industry generally preferred having two sets of matching rules as opposed to two sets of rules, even if one set of rules was preferable, as a policy matter.
On the “conduct within the United States” point, the trade associations said that they preferred the CFTC approach to determining “U.S. person” (and related statuses) in that it makes a determination based on counterparty status, rather than one based on activities associated with a particular transaction.
Lofchie Comment: From the standpoint of someone who hopes that the United States will develop a sensible system of financial regulation, this letter has less idealism and more realpolitik. Assuming that the SEC follows the advice of the trade associations to match its rules to that of the CFTC (and it is hard to see any practical reason why it should not), any improvement in the matched regulations will require the coordination of both regulators, (not a given even in the best of times). Instead, we are likely left with a lesser regulatory system administered by an unfortunately divided regulatory structure. (At least it’s Friday.)
See: Industry Group Comment Letter; SIFMA Press Release.
See also: Industry Groups Submit Critical Comments on CFTC Cross-Border Guidance (August 14, 2013).