Key Senator Urges Passage of Legislation Authorizing Regulation of Swaps as First Step in Broad OTC Derivatives Regulation

Praising the Obama Administration’s proposal to regulate OTC derivatives, Senator Levin urged quick action on his legislation repealing existing statutory provisions prohibiting federal regulators from exercising authority over swaps. In his view, the Levin-Collins bill, S. 961, would be the first step in constructing the comprehensive federal oversight regime envisioned by the Administration. The Levin-Collins measure would restore to federal regulators the authority to police the swaps market that Congress took away in the Commodity Futures Modernization Act of 2000.

The Authorizing the Regulation of Swaps Act authorize SEC and CFTC oversight and regulation of all types of swap agreements, including credit default, commodity, equity, interest rate, and foreign currency swaps. Those regulators could no longer use as an excuse for not regulating swaps the prohibitions which exist in current law. The bill uses the same definition of swaps that is used in current law to prohibit swaps regulation, and would authorize federal oversight and regulation of all exchange-traded and over-the-counter swap agreements, without exception. While S 961 does not take the next step of specifying how swaps should be regulated, noted Sen. Levin, it would clear the decks for more comprehensive reform.