To the extent to which U.S. regulators impose burdensome requirements on domestic financial institutions and the customers of those institutions before European regulators follow suit, the United States will lose business. Such lost business is not regained easily, and regulators should not assume that it will return to U.S. firms once it has been lost. Establishing a swaps or financing arrangement can be operationally intensive: once customers have used systems frequently that allow them to…

The need for so-called coordination between CCPs evidences one of the negative consequences of both Dodd-Frank and mandatory clearing: materially increased interconnected risk through clearing members. Dodd-Frank (and similar legislation throughout the world) has resulted in fewer clearing counterparties, and these remaining counterparties, which now are smaller in number and larger in size, are each more connected with the other counterparties through the increased mandatory use of clearing…

The CFTC's review of these submissions will now force the Commission and possibly the prudential regulators to confront the reality that central clearing, which is often touted as the solution to risk, is itself quite risky. The question, then, becomes this: do the regulators (i) reject some or all of these submissions and admit that central clearing was oversold as a regulatory tool or (ii) accept all of the submissions and open the door to even more submissions on less liquid products?

To what extent will prudential regulators and the SEC act, by choice or compulsion, in a manner that is consistent with the FSB's recommendations?