The heated controversy over proposed, international swap rules shows no signs of cooling.

In a letter to the Securities and Exchange Commission, a business group that calls itself the Coalition for Derivatives End-Users has urged the commission to reconsider proposed rules that allow for cross-border application of the Dodd-Frank Act's derivatives rules.

“There is not a compelling reason to impose disparate cross-border requirements on financial and non-financial end-users,” the coalition wrote.

Members of the coalition include the Agricultural Retailers Association, Business Roundtable, Financial Executives International, National Association of Corporate Treasurers, National Association of Manufacturers and U.S. Chamber of Commerce. “Imposing unnecessary regulation on derivatives end-users, which did not contribute to the financial crisis, would create more economic instability, restrict job growth, decrease productive investment, and hamper U.S. competitiveness in the global economy,” their letter says.

In May, amid pushback from overseas regulators and financial entities, the SEC proposed new rules for cross-border, over-the-counter security-based swap transactions. The 90-day public comment process for the nearly 1,000-page rule proposal ended on Aug. 21. The coalition's letter was delivered that same day. The CFTC passed its final cross-border guidance on July 12.

Under Title VII of the Dodd-Frank Act, the SEC has regulatory authority over the derivatives known as security-based swaps, as well as security-based swap dealers, major security-based swap participants, and related clearing agencies, execution facilities, and data repositories. These swaps are tied to a single security, loan, or issuer of securities, or a narrow-based security index. According to SEC data, the majority of U.S. transactions involve one or more counterparties located abroad.

The Coalition for Derivatives End-Users' letter explains that many end-user companies operate globally with numerous affiliates throughout the world. Accordingly, end-users frequently engage in cross-border derivatives transactions as part of their hedging programs. It is concerned that the SEC's rule proposal would “impose burdens and costs on end-users and end-user transactions without any corresponding regulatory benefit or prevention of systemic risk.”

“There is not a compelling reason to impose disparate cross-border requirements” on financial and non-financial end-users, such as pension plans, mutual life insurance companies, and commercial companies with non-captive finance arms, the group wrote. “Like non-financial end-users, these entities do not pose systemic risk to the financial system and use derivatives to hedge risks associated with their business.”

The coalition expressed concern about the “vagueness” of some of the proposal.  “It seems likely that the rule will need to be re-proposed,” the letter says.

For example, the SEC asks, “How should the Commission evaluate whether a foreign system is ‘comparable' for purposes of regulatory reporting and public dissemination?”

“While the SEC does suggest some factors that may be considered (scope and objectives of the foreign regulatory requirements), the failure to provide a complete list of factors that will be considered denies the public the opportunity to evaluate and comment on the regulation as it might apply to covered companies,” the coalition wrote. “The lack of specific, defined, factors potentially creates a rule regime that is inefficient, more costly to comply with, and increases business planning difficulties.

The coalition also urged a more comprehensive cost-benefit analysis. The SEC, it says, “appears to avoid discussing the additional costs it would impose on the market by drafting rules that conflict with existing cross-border swaps and security-based swaps rule regimes.”

On July 31, just prior to its summer recess, some members of Congress also expressed their concerns over differences between the SEC and CFTC rule proposals.

Addressing both SEC chairman Mary Jo White and CFTC chairman, Gary Gensler, Sen. Mike Crapo (R-Idaho) vocalized his concern with “two marginally similar plans” issued through different processes, the CFTC though interpretive guidance and exemptions, and the SEC through notice and comment rulemaking.

The regulators are "going in two different directions and appear not to be working effectively with each other and their international counterparts,” he said, suggesting that this particular issue should once again fuel talk of merging the two agencies.