By Douwe Miedema
WASHINGTON, July 10 (Reuters) - The European Union isconfident it can end a rift with the United States over how towrite common rules for financial derivatives, the bloc's topbank regulation official said on Wednesday.
The issue could come to a head this week, as the U.S.derivatives regulator needs to decide by Friday how its rulesfor the $630 trillion swaps industry apply to foreign companiesthat want to deal with U.S. businesses.
Brussels has openly complained in the past about theaggressive view of the Commodity Futures Trading Commission'schairman, Gary Gensler, who insists on a broad application ofU.S. rules to foreign companies.
But Michel Barnier, who is due to meet Treasury SecretaryJack Lew and other top U.S. officials in Washington next week,said the two sides were close to an agreement.
"I am confident in our joint capacity, in our very strongrelationship, to reach an agreement between America and Europe,including the topic of derivatives and technical standards forderivatives," Barnier told a news conference.
At stake is the CFTC's so-called cross-border guidance,which would impose cumbersome regulatory requirements on foreigncompanies, something Europe and Asia say is redundant becausethey are drawing up similar rules themselves.
The issue has not only split Europe and America: it is alsofar from clear whether Gensler will succeed in gathering therequired three votes from his fellow commissioners in favor ofthe plan at a meeting scheduled for Friday.
Friday is the last day the CFTC can decide as a broadtemporary relief for foreign companies expires, and having norule in place would cause regulatory chaos and invoke the wrathof already critical politicians.
The rules include trading requirements such as registrationand data reporting and would make swaps markets less opaqueafter the 2007-09 credit meltdown, and prevent risk affectingU.S. companies from building up abroad.
Reuters first reported that Barnier was closing in on a dealwith Gensler - something that could be a powerful bargainingchip for the former Goldman Sachs banker to push the planthrough the divided commission.
The stakes are high, with banks heavily lobbying against newrules to rein in the lucrative market, dominated by Wall Streetbanks such as Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co.
Big foreign banks such as Deutsche Bank AG,Credit Suisse Group AG and Barclays Plc feared they would have to deal with the cost of both U.S. rulesand those from their home countries.
Barclays (BARC)
