Notice of Proposed Order and Request for Comment on an Application for a Capital Comparability Determination Submitted on Behalf of Nonbank Swap Dealers Domiciled in the French Republic and Federal Republic of Germany and Subject to Capital and Financial Reporting Requirements of the European Union

The U.S. Commodity and Futures Trading Commission, CFTC, has published in the Federal Register a Notice of Proposed Order and Request for Comment on an application for a capital and financial reporting comparability determination“ for certain non-bank swap dealers (SDs) which was submitted by the International Swaps and Derivatives Association (ISDA), the Securities Industry and Financial Markets Association (SIFMA), and the Institute of International Bankers back in 2021.
Specifically, the CFTC proposes to permit German and French non-bank swap dealers which are registered in the EU and supervised by competent authorities as broker-dealers to comply with EU rules for purposes of meeting their U.S. own funds and financial reporting requirements pursuant to § 4s(e) and §4s(f) of the Commodities and Exchange Act (U.S.C Code §6s) pertaining to „registration: capital and margin requirements“ and „reporting and recordkeeping“, respectively, and pursuant to CFTC Regulations §23.101 as regards minimum financial requirements for swap dealers and §23.105 concerning financial recordkeeping, reporting, and notification requirements for swap dealers.
The CFTC would thereby issue an order of „substituted compliance“ which would apply to German and French SDs registered in the EU and which would imply that
– the European laws and regulations may be considered comparable to those of the U.S. and
– competent authorities in the EU are adequately supervising in-scope entities and enforcing the beforementioned rules and regulations.
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Comments on the proposal may be submitted to the CFTC up to August 28, 2023.