The EU Is Emerging as the New Sheriff for Global Financial Markets

From its Chicago headquarters, CME Group Inc. offers options, swaps, and futures contracts designed to help investors mitigate the potential fallout from, say, a failed gold mine in Africa, a spike in Mexican interest rates, or an oil spill in the North Sea. Today the company itself faces growing risk from an unexpected quarter: Brussels.

European Union regulators are seeking greater influence over the supervision of financial companies, including those based in the U.S., such as CME, and in the U.K. once Britain leaves the bloc. The EU is proposing that clearinghouses—financial middlemen—in the region undergo inspections by European supervisors and be required to respond to the European Central Bank in emergencies. Those rules present “grave concerns,” says Sunil Cutinho, president of CME Clearing, who on June 6 told industry executives in London that the EU’s growing reach threatens a long-standing practice of deferring to oversight in a company’s home country. “There was a time when regulators trusted each other,” Cutinho said, echoing calls by CME’s main regulator, the Commodity Futures Trading Commission, for the EU to rely on cooperation with U.S. authorities.