March 9, 2020

Christopher Kirkpatrick
Secretary
Commodity Futures Trading Commission
1155 21st Street, N.W.
Washington, DC 20581

Re: Cross-Border Application of the Registration Thresholds and Certain Requirements Applicable to Swap Dealers and Major Swap Participants, RIN 3038-AE84, 85 Fed. Reg. 952 (Jan. 8, 2020)

Dear Mr. Kirkpatrick,

The Institute of International Bankers (“IIB”)1 and the Securities Industry and Financial Markets Association (“SIFMA”)2 appreciate this opportunity to provide the Commodity Futures Trading Commission (the “Commission” or “CFTC”) with comments on the above-captioned proposal (the “Proposal”) regarding the cross-border application of the registration thresholds and certain requirements applicable to swap dealers (“SDs”) and major swap participants (“MSPs,” and, together with SDs, “Swap Entities”).

INTRODUCTION

For most of the seven-year period that the Commission has regulated the swap market under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or “Dodd-Frank”), the cross-border application of the Commission’s swaps regulations has been governed by its July 2013 cross-border guidance (the “2013 Guidance”).3 The Commission now has enough experience to provide market participants with finality and clarity by codifying a cross-border framework that, consistent with Section 2(i) of the Commodity Exchange Act (“CEA”), does not regulate activities outside the United States unless they have a direct and significant connection with activities in, or effect on, U.S. commerce. We agree with Chairman Tarbert that this framework should: (1) protect the U.S. national interest by focusing on material risks from abroad that are most likely to affect the United States; (2) avoid duplicative and overlapping regulations with respect to both foreign and other U.S. regulators; and (3) reflect Securities and Exchange Commission (“SEC”) harmonization where appropriate.4

The Proposal represents a positive step forward by the Commission and its staff to take into consideration evolving views informed by years of experience to improve the cross-border regulatory landscape. But, like any proposal, it can be improved. As described below, certain aspects of the Proposal—especially those that would expand the Commission’s extraterritorial jurisdiction beyond the 2013 Guidance, such as the proposed treatment of significant foreign subsidiaries of certain large U.S. companies (called “significant risk subsidiaries” or “SRSs”)—could better align with Chairman Tarbert’s principles of focusing on material risks to the United States and avoiding unnecessarily overlapping and duplicative regulation. Other aspects of the Proposal, such as some of the proposed exceptions from Swap Entity registration thresholds, would benefit from further clarification and consistency with the 2013 Guidance.