CFTC must not substitute weaker foreign swap broker rules for US requirements

WASHINGTON DC – Stephen Hall, Chief Legal Officer and Securities Specialist at Better Markets, issued the following statement in connection with Better Markets’ filing of a comment letter in response to the Commodity Futures Trading Commission’s proposed order conditionally providing for a substituted compliance for non-bank exchange brokers organized and domiciled in Japan.

“In response to the 2008 financial crisis, Congress passed the Dodd-Frank Act which included key reforms to derivatives market oversight. These reforms included minimum capital requirements to ensure the stability of non-bank exchange brokers and financial reporting requirements to ensure transparency and regulatory oversight. The CFTC’s proposed order concludes that the capital and reporting requirements applicable to non-bank swap dealers in Japan are substantially comparable to US requirements. But in fact, the foreign requirements seem clearly weaker, and allowing them to override US rules would undermine the post-crisis reforms that are so important to preventing the next financial crisis.

“These include capital requirements for non-bank swap dealers, perhaps the most important pillar among the financial reforms enacted in the aftermath of the 2008 financial crisis. The adequacy of these capital requirements, both in the United States and in other countries, is essential to preventing another crisis like the one that engulfed the United States and the world just a decade and a half ago. that the Commission formally enforce its substituted compliance framework for capital rules Setting the right precedent, one that ensures strong capital requirements for foreign swap dealers, is vital to the protection of the American people.

“Based on current data, the capital and financial reporting requirements adopted in Japan do not appear to be comparable to those of the Commodities Exchange Act (CEA). In the absence of additional information, regarding specifically the treatment of capital between the two regimes, Better Markets believes that the proposed order cannot be granted according to law.

You can find our full public comment letter here.


Better Markets is a nonprofit, nonpartisan, and independent organization founded to promote the public interest in financial markets, support financial reform on Wall Street, and make our financial system work again for all Americans. Better Markets works with allies, including many finance stakeholders, to promote pro-market, pro-business, and pro-growth policies that help build a stronger, safer financial system that protects and promotes jobs, jobs, and growth. savings and retirement of Americans.

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