Today, the House Agriculture Committee reviewed the Treasury Department’s legislative proposal regulating the over-the-counter (OTC) market for derivatives. The Committee conducted the first of two hearings to examine Treasury’s proposals by hearing from two panels of industry stakeholders.
“Several of the Treasury Department’s OTC proposals are similar in concept to legislation that our committee has already passed this year, including mandated clearing of all standardized over-the-counter products, and setting capital and margin requirements for dealers,” said Committee chairman Collin C. Peterson of Minnesota. “While I do have some outstanding concerns regarding Treasury’s ideas, such as the fair treatment for end users in any regulatory overhaul, I think their ideas can contribute to much-needed legislation that gives the American people the confidence that our markets are being overseen and monitored by strong, effective regulators.”
"I appreciate Chairman Peterson holding this series of hearings. We need to find ways to provide greater transparency to the over-the-counter derivatives market,” said Ranking Member Frank D. Lucas of Oklahoma. “However, today’s hearing proved there are concerns that the adminstration’s proposal overreaches. I am concerned that the the proposal will reach all the way to the end user, which needs the over-the-counter market to manage risk. The end users didn’t cause any financial catastrophe nor are they big enough to cause systemic risk. They should not be the targets of increased regulation.”
Witnesses representing exchanges, clearinghouses, and end users testified at today’s hearing about legislative language released by the Treasury Department in August regarding regulation of OTC derivatives markets, one part of a broader financial regulatory overhaul put forth by the Administration. In July, the Agriculture Committee and the House Financial Services Committee held a joint hearing examining Treasury’s OTC market principles with testimony from Treasury Secretary Timothy F. Geithner.
The Agriculture Committee acted early in the 111th Congress to increase the transparency and strengthen oversight of futures, options and OTC markets. In February, the Committee passed H.R. 977, the Derivatives Markets Transparency and Accountability Act, legislation which imposes a clearing requirement on OTC derivatives contracts and empowers regulators with the ability to suspend trading in naked credit default swaps under certain circumstances.
The review of Treasury’s OTC market proposals will continue next Tuesday with appearances from the heads of the Commodity Futures Trading Commission and the Securities and Exchange Commission.
The opening statements of all witnesses are available on the Committee website at http://agriculture.house.gov/hearings/index.html. A full transcript of the hearing will be posted on the Committee website at a later date.
Witnesses:
Panel I
* Mr. Jon Hixson, Director, Federal Government Relations, Cargill, Inc., Washington, D.C.
* Mr. Glenn English, President, National Rural Electric Cooperatives Association, Washington, D.C.
* Mr. Dave Schryver, Executive Vice President, American Public Gas Association, Washington, D.C.
* Mr. Richard B. Hirst, Senior Vice President and General Counsel, Delta Air Lines, Minneapolis, Minnesota
Panel II
* Mr. Garry N. O’Connor, Chief Product Officer, International Derivatives Clearing Group, LLC, New York, New York
* Mr. John M. Damgard, President, Futures Industry Association, Washington, D.C.
* Mr. Terrence A. Duffy, Executive Chairman, CME Group Inc., Chicago, Illinois
* Mr. Robert Pickel, CEO, International Swaps & Derivatives Association, New York New York
* Mr. Johnathan Short, Vice President and General Counsel, IntercontinentalExchange, Inc., Atlanta, GA
* Mr. Daniel N. Budofsky, Davis Polk & Wardwell LLP, on behalf of the Securities Industry and Financial Markets Association, New York, New York
