[Congressional Record Volume 159, Number 83 (Wednesday, June 12, 2013)]
[House]
[Pages H3304-H3307]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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SWAP DATA REPOSITORY AND CLEARINGHOUSE INDEMNIFICATION CORRECTION ACT
OF 2013
Mr. CRAWFORD. Madam Speaker, I move to suspend the rules and pass the
bill (H.R. 742) to amend the Securities Exchange Act of 1934 and the
Commodity Exchange Act to repeal the indemnification requirements for
regulatory authorities to obtain access to swap data required to be
provided by swaps entities under such Acts.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 742
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Swap Data Repository and
Clearinghouse Indemnification Correction Act of 2013''.
SEC. 2. REPEAL OF INDEMNIFICATION REQUIREMENTS.
(a) Derivatives Clearing Organizations.--Section 5b(k)(5)
of the Commodity Exchange Act (7 U.S.C. 7a-1(k)(5)) is
amended to read as follows:
``(5) Confidentiality agreement.--Before the Commission may
share information with any entity described in paragraph (4),
the Commission shall receive a written agreement from each
entity stating that the entity shall abide by the
confidentiality requirements described in section 8 relating
to the information on swap transactions that is provided.''.
(b) Swap Data Repositories.--Section 21(d) of the Commodity
Exchange Act (7 U.S.C. 24a(d)) is amended to read as follows:
``(d) Confidentiality Agreement.--Before the swap data
repository may share information with any entity described in
subsection (c)(7), the swap data repository shall receive a
written agreement from each entity stating that the entity
shall abide by the confidentiality requirements described in
section 8 relating to the information on swap transactions
that is provided.''.
(c) Security-Based Swap Data Repositories.--Section
13(n)(5)(H) of the Securities
[[Page H3305]]
Exchange Act of 1934 (15 U.S.C. 78m(n)(5)(H)) is amended to
read as follows:
``(H) Confidentiality agreement.--Before the security-based
swap data repository may share information with any entity
described in subparagraph (G), the security-based swap data
repository shall receive a written agreement from each entity
stating that the entity shall abide by the confidentiality
requirements described in section 24 relating to the
information on security-based swap transactions that is
provided.''.
(d) Effective Date.--The amendments made by this Act shall
take effect as if enacted as part of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Public Law 111-
203) on July 21, 2010.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Arkansas (Mr. Crawford) and the gentleman from Georgia (Mr. David
Scott) each will control 20 minutes.
The Chair recognizes the gentleman from Arkansas.
General Leave
Mr. CRAWFORD. I ask unanimous consent that all Members may have 5
legislative days in which to revise and extend their remarks on the
bill, H.R. 742.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Arkansas?
There was no objection.
Mr. CRAWFORD. Madam Speaker, I yield myself such time as I may
consume.
I want to thank the cosponsors of this bill, especially Mr. Huizenga,
Ms. Moore, and Mr. Maloney, for joining me in this bipartisan effort to
help bring transparency to the global swap markets. While I may not
agree with every provision of the Dodd-Frank law, today I believe we're
working towards its bipartisan goal of giving the regulators the tools
they need to improve systemic risk mitigation in the global financial
markets.
I think everyone agrees that the lack of transparency in the over-
the-counter derivatives markets escalated the financial crisis of 2008.
In order to provide market transparency, the Dodd-Frank law requires
post-trade reporting to swap data repositories, or SDRs, so that
regulators and market participants have access to realtime market data
that help identify systemic risk in the financial system. So far we
have made great strides in reaching this goal, but unfortunately a
provision in the law threatens to undermine our progress unless we fix
it.
Currently, Dodd-Frank includes a provision requiring a foreign
regulator to indemnify a U.S.-based SDR for any expenses arising from
litigation relating to a request for market data. Unlike the rest of
the world, the concept of indemnification is only established within
U.S. tort law. As a result, foreign regulators have been reluctant to
comply with this provision, and international regulatory coordination
is being thwarted.
While the intent of the provision was to protect market
confidentiality, in practice it threatens to fragment global data on
swap markets. Foreign regulators would be forced to create their own
SDRs, resulting in a fragmented global data framework where regulators
would be unable to see a complete picture of the marketplace. Without
effective coordination between international regulators and SDRs,
monitoring and mitigating global systemic risk is severely limited.
H.R. 742 fixes this problem by removing the indemnification
provisions in Dodd-Frank. This legislation has broad bipartisan support
and was unanimously approved by the House Agriculture Committee in
March and the House Financial Services Committee in May. Additionally,
last year, the SEC testified to the Financial Services Committee that a
legislative solution was needed, saying:
In removing the indemnification requirement, Congress would
assist the SEC, as well as other regulators, in securing the
access it needs to data held in global trade repositories.
Many other U.S. and foreign regulators have echoed these same
sentiments.
If left unresolved, the indemnification provision in Dodd-Frank has
the potential to effectively reduce transparency in the over-the-
counter derivatives markets and undo the great progress already being
made through the cooperative efforts of more than 50 regulators
worldwide. In passing this legislation, we will ensure that regulators
will have access to a global set of swap market data, which is
essential to maintaining the highest degree of market transparency and
risk mitigation.
I strongly urge my colleagues to vote ``yes'' on this bill.
With that, I reserve the balance of my time.
Mr. DAVID SCOTT of Georgia. Madam Speaker, I ask unanimous consent to
yield 10 minutes of my time to Ms. Moore of Wisconsin, who's done a
tremendous job on this issue, and that she be allowed to control that
time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Georgia?
There was no objection.
Mr. DAVID SCOTT of Georgia. Madam Speaker, I yield myself such time
as I may consume.
I rise today in support of H.R. 742, the Swap Data Repository and
Clearinghouse Indemnification Correction Act, which has been sponsored
by my colleague and good friend Representative Crawford from Arkansas,
and it's been a pleasure to work with him on this. I would like to
strongly urge all of my colleagues to vote in favor of this bill.
H.R. 742 is noncontroversial and it is highly bipartisan, shared by
both Democrats and Republicans alike. It passed the Agriculture
Committee by voice vote unanimously, and it passed the Financial
Services Committee by a unanimous vote as well, 52-0.
Madam Speaker, Dodd-Frank ushered in a new era of financial
marketing, reporting and transparency requirements--which was very much
needed--in order to aid regulators by providing insight into what were
once very opaque markets and to facilitate information-sharing between
and among United States and international regulators. These were very
laudable and necessary changes that were welcome by regulators and
market participants alike.
Dodd-Frank also included a provision requiring that in order for the
gathered action information to be shared, the SEC and the CFTC, or a
swap data repository, be indemnified against accidental release or
misuse of information.
Unfortunately, Madam Speaker, this indemnification provision is
having an unintended consequence, an unintended effect of preventing
data collection and information-sharing, particularly when
international transactions and international regulators are involved,
because indemnification is a legal concept unique only to the United
States. H.R. 742 would very simply remove this indemnification
requirement, as requested by United States, foreign regulators and swap
data repositories, so that we can realize the level of global
information-sharing that is so critical to monitoring systemic risk.
Madam Speaker, as I said, I strongly support this very simple but
necessary bill that will help to facilitate greater information-
sharing, as intended by Dodd-Frank, and I encourage my colleagues to do
the same.
I reserve the balance of my time.
Mr. CRAWFORD. Madam Speaker, I would like to yield 3 minutes to the
lead cosponsor in Financial Services on this bill, the gentleman from
Michigan (Mr. Huizenga).
Mr. HUIZENGA of Michigan. Madam Speaker, I appreciate that from my
friend from Arkansas, who has shown great leadership on this issue.
Madam Speaker, thousands of companies across this country and in my
State of Michigan utilize derivatives to better manage the risks that
they face every day. The proper use of derivatives to lower risk
benefits the global economy by allowing a range of businesses, from
manufacturing to health care, agriculture and a myriad of others, to
improve their planning and forecasting and offer more stable prices to
customers.
By imposing over-the-top regulatory burdens on end users, this could
increase costs and reduce liquidity that would prevent these companies
from using derivatives markets efficiently, effectively, and properly.
That is why I am a proud sponsor of H.R. 742, the Data Swap Repository
and Clearinghouse Indemnification Correction Act--quite a mouthful, but
an important piece of bipartisan legislation--which unanimously passed
both the Agriculture and the Financial Services Committees--a rare feat
in Washington these days--and it would remove the unrealistic
requirement to secure
[[Page H3306]]
against future losses, which some have noted is a concept unique to
U.S. law. But it would remove these unrealistic requirements imposed on
foreign regulators by Dodd-Frank as a condition of obtaining access to
the data repositories that we need to share.
In fact, earlier this year, the CFTC and the SEC--the regulatory
agencies--issued a Joint Report on International Swap Regulation
acknowledging the problems with indemnification provisions in Dodd-
Frank. The SEC and CFTC staff report said that the indemnification
provisions have ``caused concern among foreign regulators, some of
which have expressed unwillingness to register or recognize (a swaps
data repository) unless able to have direct access to necessary
information.''
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Additionally, the report noted:
Congress may determine that a legislative amendment to the
indemnification provision is appropriate.
Folks, despite opposition from the Secretary of the Treasury and the
White House, here is the bipartisan answer to this problem, and we are
glad to see that people on all sides--right, left, and center--have
agreed that this is a proper measured step to solve this issue. As you
can see, this legislative solution is a small technical fix to the
Dodd-Frank Act, but it's desperately needed and is vital to maintaining
the integrity of domestic and global derivatives market regulations, so
I urge the swift passage of H.R. 742.
Ms. MOORE. Again, I do want to thank Mr. Scott, and I yield myself
such time as I may consume.
I am so delighted to be the lead cosponsor on the Democratic side of
the Financial Services Committee of this critical legislation. However,
I do want to thank all of my colleagues on both the Ag Committee and
the Financial Services Committee for their leadership and support on
this nuanced, but important, legislation. It really took the hard work
of a bipartisan group of members and staff to get this bill to this
point.
H.R. 742, the Swap Data Repository and Clearing House Indemnification
Correction Act, strikes the mandate that global regulators indemnify
U.S.-based SDRs and regulators from liability in order to access swap
trade data in U.S.-based SDRs.
Mr. Scott and Mr. Crawford have done a fantastic job in walking
through the details of this bill. I just want to add, Madam Speaker,
that striking this indemnification provision does not compromise the
new legal framework for the swap markets enacted in Dodd-Frank, nor
does it erode any other important market protections. In fact, H.R. 742
ensures the functioning of the newly enacted swap regime and the
ability of swap data repositories to function as intended.
The bill passed both the House Financial Services and Ag Committees
without opposition. The bill is supported by consumer advocacy groups
as well as by business groups. In testimony before the Financial
Services Committee, the Securities and Exchange Commission said of the
bill:
The SEC recommends that Congress consider removing the
indemnification requirement added by the Dodd-Frank Act . . .
the indemnification requirement interferes with access to
essential information, including information about the cross-
border OTC derivatives markets.
H.R. 742 ensures information regarding the global swap market will be
available to U.S. and foreign regulators, which will enhance the global
transparency and oversight of derivatives markets.
I reserve the balance of my time.
Mr. CRAWFORD. Madam Speaker, I reserve the balance of my time.
Ms. MOORE. Madam Speaker, I yield 2\1/2\ minutes to my colleague, a
senior member of the Financial Services Committee, the gentlelady from
New York (Mrs. Maloney).
Mrs. CAROLYN B. MALONEY of New York. I thank the gentlelady for her
leadership and for yielding.
This is a very strong bipartisan effort, and I rise today in support
of H.R. 742, the Swap Data Repository and Clearing House
Indemnification Correction Act.
In enacting the Dodd-Frank Act, Congress passed the most sweeping
reforms to the financial industry in decades in response to the worst
economic crisis in our lifetimes. The facts are clear: the financial
system is global and, as a result, systemic risk is global as well. We
saw it in 2008 with the exposure that European banks had to
counterparties like Lehman and Merrill, and we see it today with U.S.
banks' exposure to the European debt crisis. The great equalizer here
is data.
This is the reason Dodd-Frank created swap data repositories. It was
so that the regulators, domestic and foreign alike, could recognize
prospective cracks in the financial armor before they become gaping
holes. This is critically important, and we must get it right. Data
collection has been one of the issues that I've worked hard on in the
past, and I want to ensure that we are doing everything we can to
support collaboration and to encourage an open exchange of data with
our foreign counterparties.
Virtually everyone agrees that the indemnification provisions in
Dodd-Frank will have the unintended consequence of limiting the extent
to which our U.S. regulators share information with well over 50
foreign regulators. That is the complete opposite of the direction we
want to go. This bipartisan effort to correct a problem in Dodd-Frank
is not an attempt in any way to weaken the bill. It is an attempt to
make good legislation even better.
This bill will go a long way toward furthering a major goal of the
Dodd-Frank legislation in reforms, which is sharing data and
collaborating with foreign entities to reduce global systemic risk.
This not only has strong bipartisan support, but it is likewise
supported by the SEC. I urge my colleagues on both sides of the aisle
to support this important correction.
Mr. CRAWFORD. Madam Speaker, I continue to reserve the balance of my
time.
Ms. MOORE. Madam Speaker, I am so delighted at this point to yield 2
minutes to someone who was formerly on the Ag Committee and is
currently on the Financial Services Committee and who understands the
importance of H.R. 742, the gentlelady from Alabama, Representative
Terri Sewell.
Ms. SEWELL of Alabama. I rise today in support of H.R. 742, the Swap
Data Repository and Clearing House Indemnification Correction Act.
H.R. 742 helps to ensure that regulators continue to have the
transparency in the derivatives market needed to make the critical
decisions to help mitigate risk in our domestic and international
financial markets.
As we continue to move forward with the implementation process of
Dodd-Frank, we must be mindful of the original purpose and intent
behind this essential reform to our financial markets. Dodd-Frank was
intended to add more transparency and oversight to our financial
markets and to ensure that another financial crisis and meltdown would
never occur. However, Congress must continue to provide important
guidance and oversight to financial regulatory agencies in order to
ensure that no unintended consequences associated with these new
regulations will run counter to the original intent.
That is why I support this bipartisan and commonsense technical
correction and clarification in H.R. 742. As a former securities lawyer
and finance professional, I believe that this bill, by correcting the
indemnification provisions that impose burdensome regulations on our
foreign regulators, will in many ways maintain the integrity of our
financial markets; and I think it is the right thing to do.
While many aspects of the new derivatives market and the entire title
VII regime remain uncertain, I want to applaud the diligent work of
both the CFTC and the SEC in drafting and implementing these critically
new regulations. Today's vote helps to add clarity and clarification to
very important derivative reform. I also want to commend my colleagues
on both sides of the aisle and my colleague, the gentlewoman from
Wisconsin, Gwen Moore, as well as my colleague from Georgia, David
Scott, for their leadership on this issue.
I urge my colleagues on both sides of the aisle to vote in favor of
this important clarification and to support this bipartisan piece of
legislation.
Mr. CRAWFORD. Madam Speaker, I continue to reserve the balance of my
time.
Ms. MOORE. I yield myself such time as I may consume.
[[Page H3307]]
I am so pleased that H.R. 742 is before us so that people understand,
Madam Speaker, that this process actually does work from time to time.
This provision was added at the last minute to the Dodd-Frank bill. It
was not fully vetted and not fully debated. In a very diligent way, two
committees on both sides of the aisle were able to come together and
really pull together this very modest, but extremely critical,
important bill to make sure that there is transparency as well as
fluidity in our oversight of derivatives markets.
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I am so pleased to be a part of this remarkable consensus on the
indemnification of this bill, and I urge all my colleagues to support
this critically important legislation.
I yield back the balance of my time.
Mr. CRAWFORD. Madam Speaker, I yield myself such time as I may
consume just to simply say that by passing and enacting H.R. 742, it
would send a clear message to the international community that the
United States is strongly committed to global data sharing and is
determined to avoid fragmenting the current global data set for over-
the-counter derivatives.
I urge a ``yes'' vote on H.R. 742, and I continue to reserve the
balance of my time.
Mr. DAVID SCOTT of Georgia. Madam Speaker, as I have no additional
speakers, I would like to close by simply saying a great thanks for the
work of Mr. Crawford from Arkansas, Ms. Moore from Wisconsin, Ms.
Sewell from Alabama, and Mrs. Maloney from New York in this great show
of bipartisanship that will help us to facilitate greater information
sharing, which was intended by Dodd-Frank.
I urge passage on this much-needed legislation, and I yield back the
balance of my time.
Mr. CRAWFORD. Madam Speaker, I thank the gentleman from Georgia.
I again urge a ``yes'' vote on H.R. 742 and yield back the balance of
my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Arkansas (Mr. Crawford) that the House suspend the rules
and pass the bill, H.R. 742.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. DAVID SCOTT of Georgia. Madam Speaker, on that I demand the yeas
and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________