Guy Dempsey, a partner in the Financial Services practice, spoke with Risk magazine on the latest cross-border guidance issued by the Commodity Futures Trading Commission. The guidance sets out who should be treated as a US person for the purposes of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the extent to which non-US swap dealers, non-US major swap participants and foreign branches of US swap dealers need to comply with US rules. Critics are calling the latest ruling—which allows firms to apply foreign rules when trading with certain counterparties without the need to obtain substituted compliance determinations—rushed and full of ambiguities. “There is a substantive problem in that the CFTC will only allow substituted compliance if the local laws are comparable. The CFTC has enacted a lot of regulations but most other jurisdictions have not, so how do you have foreign comparability if foreign regulators have not finalised their rules? The notion breaks down immediately as a matter of substance,” says Guy. He adds, “Even when comparison is possible, the final guidance does not provide a lot of detail on the time frames for the CFTC to make its determinations. All these practical issues will need to be resolved before substituted compliance becomes a reality.” (Unclear on Substituted Compliance,” July 30, 2013)