Issuing substituted compliance determinations regarding the Commodity Futures Trading Commission’s (CFTC or Commission) capital and financial reporting requirements is a critical step in achieving the outcomes that the CFTC and global regulators have been working toward since the 2008 financial crisis.  In 2009, authorities from the G-20 nations met in Pittsburgh to consider appropriate regulatory oversight of the over-the-counter swaps market.  There, they recognized the need to effectuate a global solution, rather than a piecemeal approach.  The swaps market is global, and, therefore, the regulatory response to the crisis was then, and is now, expected to be global.  When the Commission adopted the final rule regarding capital requirements for swap dealers and major swap participants in July 2020, I emphasized the importance of considering substituted compliance determinations, as achieving substituted compliance for capital adequacy and financial reporting by operating in a jurisdiction deemed comparable would have a material impact on regulated swap dealers.[1]  Substituted compliance among comparable jurisdictions best achieves robust oversight of the many swap dealers located beyond the borders of the United States.

The staff of the Market Participants Division has worked tirelessly with swap dealers and regulators in Japan, Mexico, the United Kingdom, and the European Union to assess the comparability of each of those regimes to the CFTC’s regime.  This analysis is a critical, complex, and labor-intensive task.  I support granting this no-action relief so that the Commission can continue to thoughtfully consider the applications from Japan, Mexico, the United Kingdom, and the European Union.

I thank the staff of the Market Participants Division for their work to date and their continued efforts to finalize these assessments.