NEW YORK - The US regulator overseeing the futures and options market is exploring ways to give large foreign banks and overseas subsidiaries of US lenders a reprieve from planned stringent derivatives rules, the Financial Times reported on Sunday.
New regulations such as higher capital requirements, central clearing and tighter business conduct standards are among the directives planned at reducing the systemic risk of derivatives.
The Commodity Futures Trading Commission (CFTC) is looking to grant a temporary exemption to swap dealers from complying with a number of post-financial crisis regulations governing derivatives transactions, the FT reported, citing people familiar with the matter.
The CFTC is examining, for example, whether a US bank's foreign subsidiary transacting with foreign counterparties should be exempt from some new rules governing derivatives dealers if the subsidiary's home country financial supervisors adopt robust oversight, the report said.
A foreign bank's derivatives desk also may be exempt from U.S. rules if its national regulator employs rules closely mirroring those of the CFTC, the FT reported.
In 2009, the G20 agreed on setting new swaps rules by the end of 2012 "at the latest".
US banks, including JPMorgan Chase & Co, have warned that if their overseas subsidiaries are forced to adhere to US rules, they risk losing business to the likes of Deutsche Bank and Barclays.
The internal discussions between CFTC chairman, Gary Gensler, and his staff are preliminary and have not yet resulted in formal policy, the report said.