CFTC rules could force European funds to break the law

Breaking the rules

Wayne Pestone

Of all the unappetising choices to come out of over-the-counter derivatives market reforms, European hedge funds face arguably the worst – whether to break their local rules or those in the US. The way new OTC trading rules in each jurisdiction are written, it appears they will be subject to both, but will only be able to comply with one or the other.

The problem arises because many European funds are expected to be treated as US persons for the purposes of the Dodd-Frank Act, requiring them to

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