Regulation of the Derivative Market
The Chamber supports efforts to bring transparency to the over-the-counter (OTC) derivatives market and to implement measures aimed at reducing systemic risk while preserving the ability of business end-users to use customizable OTC derivatives at a reasonable price and without the burden of margin requirements. In addition, end-users should be protected from onerous bank-like regulation that would divert precious working capital.
Priority: Ensure End-Users are Able to Manage Financial Risks
- Enact legislation that would exempt non-financial end-users from onerous, costly, and unnecessary margin requirements, consistent with the Congressional intent when Dodd-Frank was passed.
- Ensure that purely internal, inter-affiliate derivatives transactions are exempt from clearing, margin, and other requirements more appropriately applied to market-facing swaps, consistent with the Congressional intent when Dodd-Frank was passed.
- Clarify that non-financial companies that use centralized treasury units to hedge risk will be eligible for the end-user clearing exception.
- Limit the extraterritorial reach of domestic derivatives regulation to ensure U.S. dealers are not disadvantaged overseas and to ensure that Main Street non-financial companies’ cross-border counterparty relationships are not undermined by overlapping regulation.
Regulatory: The Coalition for Derivative End-Users calls on the SEC to re-propose cross board rule. Click here to read the letter.
Legislative: This Summer, the House passed several bills to ensure there is a clear end-user exemption and legislation to address the extraterritorial application of the CFTC’s rules.
- H.R. 634, the Business Risk Mitigation and Price Stabilization Act of 2013, would create a critical exemption for corporate end-users.
- H.R. 742, the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013, would eliminate an unworkable indemnification requirement in Dodd-Frank that would lead to a balkanized system for storing and accessing swaps data. (
- H.R. 1256, the Swap Jurisdiction Certainty Act, would clarify the territorial reach of U.S derivatives regulation by exempting transactions between non-U.S swap dealers and non-U.S. counterparties.
- H.R. 1038, Public Power Risk Management Act, would help ensure that public utilities’ ability to hedge their risk and minimize customer costs would not be hindered by CFTC regulation.
- Coalition for Derivatives End-Users Letter to the SEC Cross-Border Swaps (PDF) August 21, 2013
- Coalition for Derivative End-users Letter in Support of S. 888. (PDF) July 15, 2013
- EACT-US Coalition Cross-Border Derivatives Regulation (PDF) July 11, 2012
- Joint Trades Hill Letter on Cross-Border. (PDF) July 9, 2013
- H.R. 1341, the "Financial Competitive Act of 2013". (PDF) July 8, 2013
- Coalition for Derivatives End-Users Company and Association Sign-on Letter in Support of H.R. 634 and H.R. 677 (PDF) June 11, 2013
- Letter to the Members of the House of Representatives Supporting H.R. 634, H.R. 742, H.R. 1038, and H.R. 1256. (PDF) June 11, 2013
Coalition for Derivatives End-Users
CCMC works toward this goal through the Coalition for Derivatives End-Users. More than 270 companies and business associations have joined the Coalition in seeking strong, effective and fair regulation of derivatives markets that brings transparency and mitigates the risk of another systemic collapse while not unduly burdening American businesses and harming job growth. Visit www.coalitionforderivativesendusers.com for more information.