Press Releases

House Agriculture Committee assesses progress of global derivatives reforms

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Washington, July 29, 2015 | comments

Today, the House Agriculture Committee held a hearing to assess the progress of global derivatives reforms since the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law five years ago. Dodd-Frank imposed sweeping new regulations over the financial industry, including the regulation of swaps under Title VII, which had previously not been regulated in the U.S. 

After the 2008 financial crisis, leaders from 19 of the world’s largest economies and the European Union (the G-20) formulated a global plan to prevent a similar crisis from reoccurring.  They set out five categories of reforms for derivatives products– clearing, margining, electronic execution, data reporting, and capital standards – to make the markets safer. Title VII of Dodd-Frank was the U.S. effort to implement those reforms. 

Since the law’s passage five years ago, Members of the Agriculture Committee have repeatedly heard testimony from market participants supportive of the goals of Title VII, but deeply frustrated with the implementation.  Today’s hearing examined the progress regulators are making in achieving the G-20’s goals. Witnesses highlighted the still unresolved impasse over clearinghouse recognition, trade execution requirements that are fragmenting liquidity, reported data that is incomprehensible to regulators, and the U.S. margin and capital rules that are significantly different than international standards.  

“The testimony we heard today confirms the committee’s concerns over the lack of coordination and harmonization that jeopardizes the implementation of reforms to global swaps markets. Five years have passed since President Obama signed into law the derivatives reforms the G-20 leaders promised to enact.  Despite 50 rulemakings by the CFTC, so far, these reforms have not lived up to their promises, and there is a lot of work to be done.  Each failure to harmonize rules drives a regulatory wedge between the United States and our global trading partners, needlessly complicating financial markets and weakening the derivatives reforms the G-20 sought to achieve,” said Chairman K. Michael Conaway, Chairman of the Agriculture Committee.

Written testimony provided by the witness from today’s hearing is linked below. Click here for more information, including Chairman Conaway's opening statement, and the archived webcast.

Witness List:

Panel I

Mr. Terrence A. Duffy, Executive Chairman & President, CME Group, Chicago, IL
 
Mr. Scott O'Malia, Chief Executive Officer, International Swaps and Derivatives Association, Inc., New York, NY
 
Mr. Christopher S. Edmonds, Senior Vice President, Financial Markets, Intercontinental Exchange, Chicago, IL
 
Mr. Larry E. Thompson, Vice Chairman and General Counsel, Depository Trust and Clearing Corporation, New York, NY
 
Dr. John E. Parsons, Senior Lecturer, MIT Sloan School of Management, Cambridge, MA

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