House Financial Services Committee Passed Bill Yesterday by Voice Vote
The legislation calls for removing the indemnification provisions from the Dodd-Frank Act, which require U.S.-based swap data repositories (SDR) to receive a written indemnification agreement from non-U.S. regulators before sharing critical market data with them. These regulators have said they would be unable or unwilling to provide an indemnity agreement because the concept is unfamiliar to them and inconsistent with their traditions and legal structures.
“This bill would send a strong message to the international community that
A Second Issue: Addressing Plenary Access to Prevent Data Fragmentation
Bodson stressed in his testimony that indemnification is one of two technical issues (the other is known as “plenary access”) that
“This is unworkable because the scope of an SDR can be broader than just U.S. data – and regulators should have access to only that data in which they have a material interest,” Bodson said. “DTCC fully supports regulators having plenary access for SDR supervision activities related to the operation of the SDR and transactions held within it with a US nexus. However, we oppose plenary access for other purposes because non-U.S. financial firms executing transactions without a U.S. nexus will avoid reporting their trade data to a global repository if that data could become subject to US regulatory access.”
Bodson noted that if data fragmentation occurs, regulators, including the
Bodson illustrated the combined impact of indemnification and plenary access using the example of two British banks executing an interest rate swap in the
Under current international guidelines established by more than 40 regulators under the auspices of the OTC Derivatives Regulators’ Forum (ODRF), supervisors are authorized to access data where there is a nexus to the jurisdiction or entity. US regulators can view data where there is a U.S. nexus and British regulators can view data with a
Bodson urged the Committee to amend the legislation to include clarifying language stating that regulators have access to data in which the regulator has a material interest.
DTCC, through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC’s depository provides custody and asset servicing for almost 3.7 million securities issues from
DTCC offers post-trade processing services for OTC credit derivatives through the
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