A group of U.S. representatives on Thursday submitted a bipartisan letter to Commodity Futures Trade Commission Chairman Gary Gensler and commissioners today asking for answers on how the commission will regulate cross-border derivatives transactions through the Dodd-Frank Wall Street Reform and Consumer Protection Act, which establishes new rules for these transactions.
The letter follows a House Agriculture General Farm Commodities and Risk Management Subcommittee hearing, which examined the impact the commission's proposed cross-border guidance would have on the international derivatives market.
In the letter, 14 House Agriculture Committee members asked the CFTC to detail its plan of action on regulating these important cross-border derivatives transactions.
Poor implementation of Dodd-Frank could result in less competition, higher costs, greater risks, group of House Ag Committee members say
The group members say that without correct implementation, American end-users who use swaps to manage business risks will have fewer counterparties.
"Fewer counterparties will mean less competition and less liquidity in the markets, which will lead to higher costs and a higher concentration of risk in the United States," the group wrote.
"Further, American financial institutions can and will lose business to foreign competitors if Title VII rules are not implemented in proper coordination and sequence with other international reform efforts. We are hopeful that the CFTC will allow a thoughtful, deliberate and reasoned implementation of Title VII so new rules do not needlessly disrupt the U.S. and global derivatives marketplace," the members wrote.
The letter was signed by Reps. Mike Conaway, R-Texas, Rick Crawford, R-Ark., Renee Ellmers, R-N.C., Bob Gibbs, R-Ohio, Chris Gibson, R-N.Y., Vicky Hartzler, R-Mo., Tim Huelskamp, R-Kan., Steve King, R-Iowa, Randy Neugebauer, R-Texas, Martha Roby, R-Ala., Austin Scott, R-Ga., David Scott, D-Ga., Terri Sewell, D-Ala. and Jean Schmidt, R-Ohio.