A new derivatives rule should clear up any uncertainty about U.S. regulators’ role in transactions involving foreign banks and foreign counterparties and so avoid clashes with other watchdogs, Reuters reported. The rule is due to be formally adopted later on Thursday and reflects seven-year old guidance on regulating cross-border derivatives transactions. It also marks completion of implementing fundamental reforms set out in the U.S. Dodd Frank Act passed in the aftermath of the 2007-09 global financial crisis that was fueled by opacity in the multi-trillion-dollar derivatives market. The new rule will clear up any confusion over to what extent the Commodity Futures Trading Commission (CFTC) will regulate a transaction involving traders at a foreign bank in New York in a swap that has both its counterparties outside the U.S. It is a sign of how the U.S. regulator is willing to defer to regulators outside the United States, such as in Europe and Japan.
