Tuesday, January 27, 2015

House Panel Signals Strong Oversight of Dodd-Frank Derivatives Regulations

The House Agriculture Committee will conduct intense oversight of the regulatory implementation of the Dodd-Frank Act derivatives provisions. An oversight plan approved by the Committee, which is chaired by Rep. K. Michael Conaway (R-TX), said that the Ag Committee will continue to ensure that the CFTC and SEC rulemaking process is transparent and that meaningful comment is accepted and appropriately reviewed; and that the CFTC performs an adequate cost-benefit analysis for each proposed or finalized rule. Importantly, the Committee will insist that the CFTC and SEC properly coordinate with both domestic and international financial regulators so as to avoid regulatory arbitrage in the area of derivatives regulation. In that spirit, the Committee will examine the level of coordination between U.S. and international regulators for potential effects on U.S. financial institutions compared to their foreign counterparts.

More broadly, the Committee will look at how Dodd-Frank Title VII rulemakings have affected U.S. market structure. It will examine the developing effect of CFTC, SEC, and Prudential Regulator regulations, such as the imposition of new margin and capital requirements, and how they affect the ability of many end-users to utilize swaps to hedge against legitimate business risks.

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