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Thursday, June 27, 2013 7:57:41 AM

FIA calls for harmonised cross-border guidance

Derivatives trade body the Futures Industry Association (FIA) has called upon the Commodity Futures Trading Commission (CFTC) to work more closely with the Securities and Exchange Commission (SEC) to develop its cross-border guidance.

Speaking at the International Derivatives Expo (IDX), Walter Lukken, chairman and CEO of the FIA, called for the CFTC to align its substituted compliance rules with those of the SEC.

Lukken also renewed the FIA's plea for the CFTC to extend an exemption order for the cross-border application of US swaps rules under the Dodd-Frank Act that expires on 12 July.

"The FIA would like to see an extension of the exemption to line up with what the SEC is doing and what the European regulators are doing to buy more time," Lukken said.

"Segregation, customer protection, position limits, reporting issues - all of these are occurring in different jurisdictions and would benefit from greater coordination and one voice rather than multiple," he said.

In May, the SEC unveiled its substituted compliance framework for cross-border, security-based swaps whereby it recognises comparable regulatory frameworks in other jurisdictions so firms do not have to explicitly comply with similar rules in every other market in which they operate.

The CFTC is yet to finalise its cross-border guidance, which includes substituted compliance rules that will outline the application of Dodd-Frank Act rules beyond US borders.

Last year, CFTC cross-border proposals included substituted compliance guidelines, however vital questions remain regarding the definition of 'US person' and differences between entry-level and transaction-level application of the rules.

Earlier in June, the FIA announced it would merge with Europe-focused derivatives trade body the Futures and Options Association (FOA) to form a global organisation including an Asia affiliate. This merger was in part driven by the need to develop unified industry positions on international regulatory issues such as the scope of Dodd-Frank rules.