External Meetings: Meeting with European Banking Federation

The main point made by the European Banking Federation (“EBF”) was that duplicative regulation of swaps activity resulting from the extraterritorial application of Title VII of the Dodd-Frank Act should be avoided to the extent possible.  The EBF noted that since the Federal Reserve is the primary regulator of the U.S. operations of many European banks, the CFTC’s regulation of the swaps of European banks should generally defer, where appropriate, to Federal Reserve regulation, and to the banks’ home country regulators.~The EBF generally supports the comment letter filed by the Institute of International Bankers (Comment 27052) and in particular its allocation of regulatory responsibility for swaps between the US and home country regulators.  The EBF also noted that it is not particularly concerned with requirements to register as a swap dealer, but rather with potentially duplicative requirements being imposed as a result of regulation.  Its key concern is that capital requirements should be applied on an entity-wide basis by each bank’s primary regulator, rather than having varying capital requirements imposed by different regulators.~The EBF believes that while capital requirements should be applied entity-wide, requirements that are applicable to each swap, such as clearing requirements, may vary depending on which regulator has authority over the type of swap and the parties to it.  Other requirements, such as business conduct requirements, may sometimes apply entity-wide or to specific swaps depending on the type of requirement.  However, the EBF also pointed out that to the extent that business conduct and similar requirements are harmonized across the various regulators, it will be less necessary to carefully apportion responsibility among the regulators, because the banks could comply with all of the harmonized requirements.