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Cross-Border Harmonization

Respecting the Global Nature of the Swaps Market

ABA Position

Swaps markets are global in nature. Without harmonized regulatory approaches, swaps markets are particularly subject to fragmentation and migration away from regulated entities. ABA encourages the agencies to be mindful of the competitive and market implications of their cross-border regulatory initiatives on the various business structures through which U.S. banks conduct business overseas. It is important that the agencies seek to address the risks in the swaps market without unduly constraining the global nature of those markets.

Section 2(i) of the Commodity Exchange Act and Section 30(c) of the Securities Exchange Act of 1934 were added by Section 722 of the Dodd-Frank Act. Section 2(i) of the CEA applies to swaps and Section 30(c) of the 1934 Act applies to security-based swaps. Collectively, both sections provide that Title VII of the Dodd-Frank Act will not apply to swaps or security-based swaps activities outside the U.S. unless such activities either:

  • Have a direct and significant connection with activities in, or effect on, commerce of the U.S.; or
  • Contravene such rules or regulations as the CFTC may prescribe or promulgate as are necessary or appropriate to prevent the evasion of any provision of Title VII.

Section 2(i) of the Commodity Exchange Act and Section 30(c) of the Securities Exchange Act of 1934 were added by Section 722 of the Dodd-Frank Act. Section 2(i) of the CEA applies to swaps and Section 30(c) of the 1934 Act applies to security-based swaps. Collectively, both sections provide that Title VII of the Dodd-Frank Act will not apply to swaps or security-based swaps activities outside the U.S. unless such activities either:

  • Have a direct and significant connection with activities in, or effect on, commerce of the U.S.; or
  • Contravene such rules or regulations as the CFTC may prescribe or promulgate as are necessary or appropriate to prevent the evasion of any provision of Title VII.
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