On March 14, the House Agriculture Committee held a public hearing to review seven legislative proposals amending Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposals are the culmination of the committee's oversight efforts of the Commodity Futures Trading Commission (CFTC) as it writes rules for Dodd-Frank.

"This committee has heard from numerous market participants -- from agricultural producers to public power companies -- and all of them have the same concerns,” said Oklahoma Rep. Frank Lucas, chairman of the committee. “They fear some of these regulations will make using derivatives so expensive that businesses will be forced to scale back or stop using them to hedge against risk. That increases the costs for consumers and reduces stability in the marketplace. Today's hearing examined several balanced proposals to ensure Dodd-Frank is implemented in a way that does not disrupt markets or harm the economy."

The bills include the following:

  • H.R. 634, the Business Risk Mitigation and Price Stabilization Act, ensures that end-users can continue to use derivatives to manage business risks without being subject to costly margin requirements.
  • H.R. 677, the Inter-Affiliate Swap Clarification Act, ensures that transactions between affiliates within a single corporate group are not regulated as swaps.
  • H.R. 742, the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013, would allow data sharing between U.S. and international regulators and swap data repositories without adding an unnecessary layer of legal bureaucracy.
  • H.R. 992, the Swaps Regulatory Improvement Act, amends Section 716 of the Dodd-Frank Act to limit the swap desk push-out requirement so that it does not apply to equity or commodity swaps.
  • H.R. 1003 would require the CFTC to assess the costs and benefits of its actions.
  • H.R. 1038, the Public Power Risk Management Act, would allow producers, utility companies, and other non-financial entities to continue entering into energy swaps with government-owned utilities without danger of being required to register with the CFTC as a swap dealer.

Additionally, the committee also examined one draft proposal, the Swap Jurisdiction Certainty Act, which would direct the CFTC and the Securities and Exchange Commission to adopt a joint rule on how they will regulate cross-border swaps transactions as part of the new requirements created in the Dodd-Frank Act.

 

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