A top US financial regulator has taken an unusual swipe at his EU counterparts in a deepening row over how to supervise international trading.
Christopher Giancarlo, chair of the Commodity Futures Trading Commission, wrote last week to Valdis Dombrovskis, the European Commission vice-president responsible for financial services, to publicly criticise comments made by an EU official at a conference this month.
The letter, seen by the Financial Times, hits out at comments made by Patrick Pearson, head of unit, financial markets infrastructure at the commission, at an event run by derivatives trade association the FIA in London.
Mr Pearson had said the US “fell for” an agreement it had struck with the EU in March in which they emphasised the need to trust local regulators and for sustained dialogue. Alongside other comments by Mr Pearson, Washington has concerns Brussels will not adhere to the spirit of the accord. The CFTC declined to comment.
The disagreement threatens to undermine fragile relations on financial regulation between the US and EU, which have been fractious in recent years as both sides work out how to oversee London’s clearing houses after Brexit.
Clearing houses have become a critical tool for global financial stability, as they act as central counterparties between sellers and buyers of shares or derivatives. London dominates the market for clearing both dollar and euro-denominated trades, turning it into a flashpoint for both sides.
Generally the EU has sought to prevent an escalating war of words with the US over the international implications of each side’s regulations, and to engage in talks about how to ease the concerns.
The EU’s plans for tougher regulation — designed with post-Brexit Britain in mind — endured sustained criticism in Washington after they were published in 2017, with the CFTC warning that the draft law would have allowed Brussels to pressure US clearinghouses to move activities into the EU. Mr Giancarlo has previously warned that any such moves would breach transatlantic trust.
Mr Giancarlo said he had been “surprised to hear Mr Pearson speak negatively” about the March agreement. “I was not pleased to listen to Mr Pearson publicly suggest that you or I had been manipulated in our agreement on an important policy statement,” he told Mr Dombrovskis in his letter.
“His comments — capped by the taunt ‘You fell for it’ — suggests the joint statement did not represent a mutual understanding that each authority would seek to increase the use of deference to each other,” he wrote.
Mr Giancarlo asked Mr Dombrovskis to clarify whether Mr Pearson’s comments accurately represented the official position of the commission, or to “please publicly disavow his comments”.
Asked about Mr Pearson’s comments, an EU official told the FT that “deeds speak louder than words” and pointed to agreements reached with the CFTC during Mr Dombrovskis’ mandate that have improved international supervisory co-operation. “We have received the letter and we are currently preparing a reply,” a spokesperson said.