July 21, 2014

In this article, Jenner & Block Partner Timothy A. Karpoff examines the debate over how to apply U.S. swaps rules abroad.   Tim explains that the United States and Europe are “out of sync” regarding their approach to regulating swaps.  Most U.S. swaps, he observes, must be traded through organized trading platforms or swap execution facilities – but that is not the case in Europe, where discussions on trading and market structure legislation have only just begun.  “The gap in market structure rules means that swaps will be traded and priced very differently in the U.S. and abroad, with significant impact on how dealers compete with one another,” Tim writes.  He then analyzes how banks have responded to the divergent trading rules and concludes that the Commodity Futures Trading Commission should provide “more nuanced advice about how its rules apply outside of the U.S.”