The Clearing House Association filed a comment letter in response to the CFTC’s proposed interpretive guidance regarding the cross-border application of the swaps provisions of Title VII of Dodd-Frank. TCH is concerned that, as a general matter, the proposed guidance may exceed the limits imposed by Dodd-Frank. 

More specifically, TCH is concerned that the definition of “U.S. Person” would include a non-U.S. branch or agency of a U.S.-based bank, but not a non-U.S.-based subsidiary. The guidance may in effect dictate the organizational structure of firms in a way that ignores international recognition of efficient bank structures, consolidated supervision of financial holding companies, and enterprise-wide risk management requirements. 

The guidance could indeed result in additional and new systemic risks and increase capital costs for banks as a result of the need to restructure in order to remain on a level-playing field with other U.S. and non-U.S. institutions.