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CFTC Proposes Narrowing Wall Street’s Foreign Swaps Loophole 

June 30, 2015

Silla Brush, Bloomberg Businessweek

The top U.S. derivatives regulator took a step toward preventing Wall Street banks from evading the Dodd-Frank Act and shifting some of their trading overseas.

The Commodity Futures Trading Commission voted unanimously Monday to propose a requirement that broadens when banks’ overseas divisions must meet U.S. collateral standards designed to curb risks in the $700 trillion swaps market.

The agency decided to act after Wall Street’s biggest dealers stopped backing some of their offshore affiliates or guaranteeing their trades. That meant lenders were freed from parts of Dodd-Frank that were intended to reduce risk and increase transparency in the market.

“I think the rule today is a proper response to the concern that offshore swaps can result in risk flowing back into this country whether or not they are guaranteed,” Timothy Massad, the chairman of the CFTC, told reporters during a conference call on Monday.

Read more: Bloomberg Businessweek

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