ABA urged the House to pass two bipartisan derivatives bills when it votes on them today. H.R. 634 would clarify that end users are not subject to margin requirements under the Dodd-Frank Act. “Imposing margin requirements on any end users would discourage the use of swaps to hedge or mitigate risk, so it would both increase risk in the system and vitiate the end-user clearing exemption,” said ABA EVP James Ballentine in a letter to House members.
H.R. 1256 would require the SEC and the CFTC to adopt rules jointly that apply Title VII of Dodd-Frank to cross-border transactions. The two agencies have proposed different guidance, and “banks operating globally are uncertain about which U.S. regulatory requirements may or may not apply to some of their derivatives activities,” Ballentine said. “Market participants that engage in swaps and security-based swaps need clarity and would benefit from consistency between CFTC and SEC rules.”
Read the letter.