LONDON/WASHINGTON (Reuters) - The European Union’s data watchdog will decide in coming weeks if financial regulators around the world can routinely swap information to keep markets clean without getting tangled up in the EU’s new data protection regime.

The European Union flag flies on top of the Rock in the British overseas territory of Gibraltar, historically claimed by Spain, November 23, 2018. REUTERS/Jon Nazca

The EU introduced its General Data Protection Regulation in May to strengthen personal data privacy rights, giving consumers greater control over their personal information.

But U.S. finance regulators have warned that the EU’s data rules have started to adversely affect the exchange of cross-border information.

Securities and Exchange Commission chair Jay Clayton said at an event earlier this month that the SEC had had to strip out personal data from some items in order facilitate information exchanges.

Since May regulators have had to use a “public interest” exemption to exchange information on a case-by-case basis for tackling fraud like insider trading or attempts to rig market benchmarks.

Spanish markets regulator CNMV said that relying on the public interest exemption means that swapping data has to be done on a case-by-case basis, which was working smoothly as a temporary fix.

The EU’s European Securities and Markets Authority has said this exemption could be used until a solution proposed by global regulators and known as an “administrative arrangement” is approved, but some regulators elsewhere in the world are worried about falling foul of data privacy rules due to legal uncertainty.

The European Data Protection Board will have to decide if EU regulators can use the administrative arrangement to swap sensitive market data with counterparts outside the bloc.

“This will be discussed and dealt with in the first quarter of 2019,” a spokeswoman for the EDPB said.

A source at a European regulator said the data watchdog was expected to approve the new arrangement at the end of January or mid-February. Approving the administrative arrangement would give reassurance when swapping data cross-border.

ESMA had no comment.