The U.S. Commodity Futures Trading Commission voted unanimously behind closed doors on Friday to approve two key measures outlining how U.S. swaps regulations will apply overseas. 

The measures had previously been slated for a public vote last Thursday, but the meeting was abruptly canceled due to last-minute negotiations between two Democratic commissioners. The second measure grants U.S. and foreign firms a delay in complying with certain "entity level" requirements like business conduct standards. At issue is how to ensure a level playing field for swaps players as reforms are put in place at different paces globally after the financial crisis.

A swap is a financial contract in which two parties exchange cash flows on debt, currencies, or other assets, to hedge risk or make a profit. One measure approved by the CFTC gives guidance on which
entities and which transactions will be subjected to U.S. "entity level" and "transaction level" rules. "Entity level" rules include how much capital is needed to back up a trade, while "transaction level" requirements detail the amount of collateral a firm must put up for its transactions.

"We must not forget the lessons of the 2008 crisis and earlier," CFTC Chairman Gary Gensler said in a statement. "Swaps executed offshore by U.S. financial institutions can send risk straight back to our shores." The CFTC was tasked by the 2010 Dodd Frank law with writing a raft of rules to boost transparency and limit risk in the murky $650 trillion over-the-counter swaps market.

One of the most hotly debated pieces of the Dodd-Frank swaps rules is how broadly U.S. derivatives rules will reach into the overseas operations of U.S. and foreign banks. Risky derivatives trading at overseas subsidiaries of firms like insurer American International Group (AIG) severely damaged the U.S. financial system during the 2007-2009 financial crisis and led to multibillion-dollar taxpayer bailouts. CFTC Chairman Gary Gensler has pointed to JPMorgan Chase & Co's multibillion-dollar loss - from trades the bank booked in London - to highlight the need for a tough overseas swaps
regime.

But the banking industry and foreign regulators have pushed back, warning that an overly broad regime might duplicate or conflict with rules of foreign regulators, or put certain banks at a competitive disadvantage.