September 25, 2019
Nihal Patel comments on the Commodity Futures Trading Commission proposal for two new ways for foreign clearing houses to serve U.S. clients: exempt status using third-country clearing members; and alternative compliance using U.S. futures commission merchants (FCMs).
An excerpt from “CFTC’s Equivalence Plan Divides Clearing Houses and Clients,” Risk.net, September 25, 2019:
CFTC chairman J. Christopher Giancarlo’s successor, Heath Tarbert, has flagged up the foreign derivatives-clearing organisations (DCOs) package as one of his priorities for completion, along with re-proposing commodity position limits and reviving a proposed regulation for automated trading. He would presumably want to finalise those measures before the presidential election in November 2020, which could lead to a change of leadership and strategy at the regulatory agencies. That may turn out to be a tight timeline.
“It’s pretty tough to predict at this point. These proposals are controversial enough that they will certainly be looking at all the comments. It’s hard to imagine this gets finalised quickly, given that the CFTC will have a good number of comments to consider plus the dissents from two commissioners and international considerations,” says Nihal Patel, a lawyer specialising in derivatives regulation at Cadwalader, Wickersham & Taft.