The House of Representatives Thursday passed by an overwhelming majority legislation that would limit the Commodity Futures Trading Commission’s (CFTC) jurisdiction over cross-border swap transactions.

By a vote of 301 to 124, lawmakers voted out the Swap Jurisdiction Certainty Act (H.R. 1256), which would exempt from the U.S. swap requirements foreign units of U.S. firms that are in compliance with the swaps regulatory regime of a G20 member nation (or other foreign jurisdiction as jointly determined by the CFTC and the Securities and Exchange Commission (SEC). The bill has been sent to the Senate where its progress is uncertain given the Democratic opposition that already is lining up.

The measure requires the CFTC and the SEC to report to Congress if they determine jointly that the regulatory requirements of the G20 member nation or other foreign jurisdiction are not broadly equivalent to U.S. swaps requirements.

“The bill would require the SEC and CFTC to have identical cross-border rules; it would require a formal rule to be issued; and finally, it would authorize the SEC and CFTC to regulate swaps transactions between U.S and foreign entities if the regulators are concerned about the importation of systemic risk” into the United States, said Rep. Scott Garrett (R-NJ), chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises and the bill’s sponsor.

“If we get the cross-border application of Dodd-Frank wrong, the swaps trade could move permanently to foreign jurisdictions,” said Rep. Mike Conaway (R-TX).

But CFTC Chairman Gary Gensler has repeatedly emphasized the need for the U.S. agency to maintain cross-border regulation. Financial institutions “commonly set up hundreds, if not thousands, of ‘legal entities’ around the globe with a multitude of affiliate relationships. When a run starts on any overseas affiliate or branch of a modern institution, risk comes crashing back to our shores,” he said. As examples, he cited the foreign affiliates of AIG, Lehman Brothers, Citigroup and Bear Stearns, which contributed to the financial crisis in the United States in 2008.

“All of these common-sense reforms Congress mandated [in Dodd-Frank] could be undone if the overseas guaranteed affiliates and branches of U.S. persons are allowed to operate outside of these important requirements,” Gensler said.

Several other measures faced little opposition on the House floor. By a unanimous vote, the House Thursday also agreed to H.R. 1038 exempting any entity entering into a utility operations-related swap with a utility special entity from mandatory registration as a swap dealer.

H.R. 742, which was passed by 420-2, repeals the prerequisite that before the CFTC may share information with derivatives clearing organizations (DCO) and swap data repositories, such agencies must agree to indemnify the CFTC for expenses arising from litigation relating to the information provided.

Lastly H.R. 634, which was approved by 411 to 12, would exempt, from the rules of prudential regulators for swap dealers and major swap participants with respect to initial and variation margin requirements for swaps not cleared by a registered DCO, those swaps in which one of the counterparties: 1) is eligible for an exception from clearing requirements for certain significant price discovery agreements, contracts or transactions in a commodity exempt from regulation by the CFTC; or 2) satisfies specified criteria governing treatment of affiliates in connection with clearing requirements.

All of the bills, with the exception of H.R. 634, have been referred to the Senate Agriculture Committee for action. H.R. 634 has been sent to the Senate Banking Committee.

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