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If cross-border rules currently proposed by the US Securities and Exchange Commission and the Commodity Futures Trading Commission are not harmonized, international derivatives markets could be damaged, according to exchange executives and derivatives industry leaders, who testified before the US House of Representatives Committee on Agriculture Tuesday. 

The cross-border rules are particularly important for large integrated oil and natural gas companies that have operations outside of the US and use swaps products to hedge credit and foreign exchange risks. 

Foreign countries are being too critical and potentially hurting delicate negotiations with U.S. regulators over how broadly they should apply new over-the-counter derivatives rules to trades that cut across borders, U.S. Treasury Secretary Jack Lew said on Tuesday.

Lew's comments, made during testimony before the Senate Banking Committee in a broad-ranging hearing on regulatory issues, marked a rare occasion where he publicly waded into the thorny debate over cross-border regulations for swaps.

Top executives of the two largest U.S. derivatives exchanges say regulators must take further steps to align Dodd-Frank Act rules with those of foreign counterparts to avoid oversight splits that could harm markets. 

The Commodity Futures Trading Commission and overseas agencies have a few months to improve coordination before differences hurt business, IntercontinentalExchange Inc. Chairman and Chief Executive Officer Jeffrey Sprecher said in remarks for a House Agriculture Committee hearing where he will testify alongside CME Group Inc. Executive Chairman Terry Duffy.

New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform. They may also signal worse things to come.

The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley.

Sheila Bair, the hard-charging former director of the Federal Deposit Insurance Corporation, stands at the center of three of the biggest debates in Dodd-Frank implementation.

As someone who knows the FDIC — which is actually the agency that takes down failing banks — she’s in an unusually good position to know whether the law’s resolution authority will work. These are the new powers the FDIC has in Dodd-Frank to impose losses and fail a financial firm (it’s what Barney Frank called “death panels” for financial megabanks). 

Experts have warned a September deadline the European Commission has set for the European Securities and Markets Authority (ESMA) to draft technical standards covering the extraterritorial aspects of new clearing regulation will not be met.

Jonathan Faull, director general, internal markets and services at the European Commission, called on ESMA chair Steven Maijoor to deliver the pan-European securities watchdog draft technical standards governing the extraterritorial issues within the European market infrastructure regulation (EMIR) by 25 September.

Sen. Elizabeth Warren (D-Mass.) announced her opposition to a set of bills easing derivatives requirements that garnered heavy bipartisan support in the House, arguing it is "no time to go backwards" on financial reform.

Warren is now throwing her high profile into what may be an uphill battle to prevent the changes to the Dodd-Frank financial reform law, as the House Financial Services cleared the measures with overwhelming support from both parties.