Dissenting Statement by Commissioner Brian Quintenz before the Open Commission Meeting of November 5, 2019

FBOT Registration

November 5, 2019

Today, the Commission is considering whether to formally register as foreign boards of trade (FBOTs) three prominent European futures exchanges (Euronext Amsterdam, Euronext Paris, and European Energy Exchange) that have been permitted to directly access the U.S. market for many years under staff no-action relief.[1]  Both the Commission’s previous policy of granting no-action relief and current policy of registering foreign exchanges as FBOTs are premised on a policy of deference to foreign regulatory regimes.  The Commission assesses whether foreign exchanges are regulated comparably to how the CFTC supervises U.S. designated contract markets (DCMs), and, if so, permits the exchange to access U.S. markets without complying with the Commission’s DCM regulations or being subject to regularly scheduled CFTC examinations.[2]  This policy efficiently promotes cross-border markets and rationally focuses the Commission’s supervisory resources on U.S. exchanges.  While I do not disagree with the substance of granting these exchanges permanent status as registered FBOTs, I do disagree with the timing of today’s move by the Commission to finalize and formalize the status of these three European exchanges as registered FBOTs.

Last month, dissenting to the Commission’s proposed exclusion for the European Stability Mechanism (ESM) from the Commission’s margin requirements for uncleared swaps,[3] I reiterated my approach to our current regulatory relationship with our European counterparts in light of their refusal to stand by or re-affirm their 2016 commitments in the CFTC’s and European Commission’s common approach to the regulation of cross-border central counterparties (CCPs) (CFTC-EC CCP Agreement).[4]  Specifically, the absence of the agreement’s re-affirmation directly implied the agreement’s abrogation by the European Market Infrastructure Regulation 2.2 (EMIR 2.2).[5]  While the possibility still exists for a successful outcome to EMIR 2.2 that fully respects the CFTC’s ultimate authority over U.S. CCPs, still no assurance has been given to remove that doubt. 

Today’s vote, however, is not on a proposal, but on multiple final formal registrations. While I believe the Chairman and all my fellow Commissioners are just as committed to a satisfactory resolution to this cross-border discussion with the E.U. as I am, I question whether we should act on this today and under what conditions the decision will be made to reconsider this status should this discussion not resolve productively.  

FBOT registration depends on the CFTC’s trust in our E.U. counterparts.  Such trust continues to be misplaced until the E.U. can provide assurance that the CFTC-EC CCP Agreement will be upheld. I therefore dissent from today’s action to register Euronext Amsterdam, Euronext Paris, and European Energy Exchange as FBOTs.