Unclear on substituted compliance

The US Commodity Futures Trading Commission’s final cross-border guidance, published on July 12, provides answers to some long-running puzzles, but also generates a host of new questions. Critics say the rules are rushed and full of ambiguities – not least on how substituted compliance will work in practice. By Peter Madigan

A pattern has emerged in the Dodd-Frank rule-making process. The Commodity Futures Trading Commission (CFTC) issues a rule and sets a deadline, but within hours of the rule taking effect – and sometimes after – it releases a no-action letter delaying the start date. That happened again last month, when a crucial exemption order governing how cross-border trades should be treated was extended on July 12 – the day it was due to expire – alongside the release of the final CFTC cross-border guidance