[Congressional Record Volume 161, Number 109 (Tuesday, July 14, 2015)]
[House]
[Pages H5145-H5147]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SWAP DATA REPOSITORY AND CLEARINGHOUSE INDEMNIFICATION CORRECTION ACT
OF 2015
Mr. HURT of Virginia. Mr. Speaker, I move to suspend the rules and
pass the bill (H.R. 1847) 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, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1847
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 2015''.
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 of such Act (7
U.S.C. 24a) is amended--
(1) in subsection (c)(7)--
(A) in the matter preceding subparagraph (A), by striking
``all'' and inserting ``swap''; and
(B) in subparagraph (E)--
(i) in clause (ii), by striking ``and'' at the end; and
(ii) by adding at the end the following:
``(iv) other foreign authorities; and''; and
(2) by striking subsection (d) and inserting the following:
``(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) of the Securities Exchange Act of 1934 25 (15 U.S.C.
78m(n)(5)) is amended--
(1) in subparagraph (G)--
(A) in the matter preceding clause (i), by striking ``all''
and inserting ``security-based swap''; and
(B) in subclause (v)--
(i) in subclause (II), by striking ``; and'' and inserting
a semicolon;
(ii) in subclause (III), by striking the period at the end
and inserting ``; and''; and
(iii) by adding at the end the following:
``(IV) other foreign authorities.''; and
(2) by striking subparagraph (H) and inserting the
following:
[[Page H5146]]
``(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
Virginia (Mr. Hurt) and the gentlewoman from California (Ms. Maxine
Waters) each will control 20 minutes.
The Chair recognizes the gentleman from Virginia.
General Leave
Mr. HURT of Virginia. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days in which to revise and extend their
remarks and to include extraneous material on the bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Virginia?
There was no objection.
Mr. HURT of Virginia. Mr. Speaker, I ask unanimous consent to yield
all remaining time to the gentleman from Georgia (Mr. Austin Scott) and
ask unanimous consent that he be allowed to control the time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Virginia?
There was no objection.
Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I yield myself such time as
I may consume.
I rise today in support of H.R. 1847, the Swap Data Repository and
Clearinghouse Indemnification Correction Act of 2015.
I want to thank Mr. Hurt and Chairman Hensarling for allowing the
Agriculture Committee to manage time with them today. The members of
our committee have always appreciated the close working relationship
that we have with the Financial Services Committee on these financial
and regulatory issues.
H.R. 1847 is a targeted correction to remove barriers to information
sharing. Dodd-Frank currently requires indemnification agreements from
foreign regulators requesting information from U.S. swap data
repositories or derivatives clearing organizations.
The agreements state that the foreign regulators will abide by
certain confidentiality requirements and indemnify the U.S. commissions
for any expenses arising from litigation relating to the request for
information.
Unfortunately, the concept of indemnification does not exist in many
foreign jurisdictions. Therefore, some foreign regulators cannot agree
to these requirements. This may hinder our ability to make workable
data sharing arrangements with those regulators and, ultimately,
fragment the marketplace by encouraging them to establish their own
data repositories.
H.R. 1847 addresses this potential data sharing problem by removing
the indemnification requirements from current law, while maintaining
existing provisions requiring confidentiality obligations.
This technical correction has been a longstanding priority for
Congress. Similar legislation passed the House in the 113th Congress by
a vote of 420-2 and passed the House again this year as part of H.R.
37, the Promoting Job Creation and Reducing Small Business Burdens Act.
Additionally, this identical language was included in H.R. 2289, the
Commodity End-User Relief Act, after a small technical change was
offered by Ms. Moore and Mr. Crawford and accepted by the House.
I urge my colleagues to join me in supporting H.R. 1847 to ensure
that regulators and market participants have access to a global set of
swap market data.
I reserve the balance of my time.
House of Representatives,
Committee on Agriculture,
Washington, DC, July 13, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services, House of
Representatives, Washington, DC.
Dear Chairman Hensarling: I am writing concerning H.R.
1847, the ``Swap Data Repository and Clearinghouse
Indemnification Correction Act of 2015.''
This legislation contains provisions within the Committee
on Agriculture's Rule X jurisdiction. As a result of your
having consulted with the Committee and in order to expedite
this bill for floor consideration, the Committee on
Agriculture will forego action on the bill. This is being
done on the basis of our mutual understanding that doing so
will in no way diminish or alter the jurisdiction of the
Committee on Agriculture with respect to the appointment of
conferees, or to any future jurisdictional claim over the
subject matters contained in the bill or similar legislation.
I would appreciate your response to this letter confirming
this understanding, and would request that you include a copy
of this letter and your response in the Committee Report and
in the Congressional Record during the floor consideration of
this bill. Thank you in advance for your cooperation.
Sincerely,
K. Michael Conaway,
Chairman.
____
House of Representatives,
Committee on Financial Services,
Washington, DC, July 14, 2015.
Hon. Michael Conaway,
Chairman, Committee on Agriculture,
Washington, DC.
Dear Chairman Conaway: Thank you for your July 13 letter
regarding H.R. 1847, the ``Swap Data Repository and
Clearinghouse Indemnification Correction Act of 2015''.
I am most appreciative of your decision to forego action on
H.R. 1847 so that it may move expeditiously to the House
floor. I acknowledge that although you are waiving action on
the bill, the Committee on Agriculture is in no way waiving
its jurisdiction over any subject matter contained in the
bill that falls within its jurisdiction. In addition, if a
conference is necessary on this legislation, I will support
any request that your committee be represented therein.
Finally, I shall be pleased to include your letter and this
letter in our committee's report on H.R. 1847 and in the
Congressional Record during floor consideration of the same.
Sincerely,
Jeb Hensarling,
Chairman.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker, transparent trading of derivatives, along with realtime
reporting of trades to swap data repositories, is a crucial element of
the Dodd-Frank Act.
This bill makes necessary technical changes to better enable our
Nation's regulators to share that data about derivatives with one
another and with their foreign counterparts.
An unintended result in Dodd-Frank of trying to protect both
regulators and the data repositories from burdensome litigation was
that other regulators lacked the authority to pay future legal
expenses, thus threatening to prevent the sharing of information.
This was clearly not intended as one of the primary goals of title
VII, to enable regulators and the public to better understand the
derivatives market. H.R. 1847 addresses those concerns and is supported
by the industry and advocates, like Americans for Financial Reform,
alike.
I also understand that the bill includes additional changes to the
legislation requested by the SEC to better target the statutory change.
I thank Representative Moore and Representative Crawford for working
together in a bipartisan manner to address these issues and solve a
very real threat to cross-border regulatory cooperation and oversight.
I urge support of this legislation, and I reserve the balance of my
time.
Mr. AUSTIN SCOTT of Georgia. I yield such time as he may consume to
the gentleman from Arkansas (Mr. Crawford) and thank him for his
continued work on this technical but critical issue.
Mr. CRAWFORD. Mr. Chairman, I thank the distinguished chairman of the
subcommittee, Mr. Scott, and I would like to thank the other cosponsors
of this bill, Mr. Huizenga, Ms. Moore, and Mr. Maloney, for joining me
in this bipartisan effort to help bring transparency to the global swap
markets. I certainly appreciate the subcommittee chairman's support as
well.
While I might not agree with every provision in the Dodd-Frank law
today, I believe we are working towards its bipartisan goal of giving
regulators the tools they need to improve systemic risk mitigation in
the global financial markets.
I think everyone agrees that the lack of transparency and the over-
the-counter derivatives markets escalated the financial crisis of 2008.
In order to provide market transparency, the Dodd-Frank law requires
posttrade reporting to swap data repositories, or
[[Page H5147]]
SDRs as they are called, so that regulators and market participants
have access to realtime market data that will 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 requires a provision requiring a foreign
regulator to indemnify a U.S.-based SDR from any expenses arising from
litigation relating to a request from market data. While the intent of
the provision was to protect market confidentiality, in practice, it
threatens to fragment global data on swap markets because it is a major
stumbling block to our regulators' abilities to coordinate with foreign
counterparts.
The intended result is a fragmented global data framework where
regulators were unable to see a complete picture of the marketplace.
Without effective coordination between international regulators and
SDRs, monitoring and mitigating global systematic risk is severely
limited.
My bill fixes this problem by removing the indemnification provisions
in Dodd-Frank. This legislation has broad bipartisan support and passed
the House by an overwhelming vote of 420-2 in the last Congress, as
Chairman Scott indicated. Additionally, both the SEC and CFTC are on
record supporting this bill.
If left unresolved, the indemnification provision in Dodd-Frank has
the potential to 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 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.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield such time as
she may consume to the gentlewoman from Wisconsin (Ms. Moore), who
happens to be the ranking member for the Subcommittee on Monetary
Policy and Trade.
{time} 1445
Ms. MOORE. Mr. Speaker, I thank the madam ranking member for this
opportunity to speak on H.R. 1847.
I also want to thank all of my cosponsors on this legislation:
Representative Huizenga, Representative Crawford, and Representative
Sean Patrick Maloney.
Mr. Speaker, the House Financial Services and Agriculture Committees
passed this legislation with bipartisan support and without controversy
in 2013, 2014, and 2015. This bill has passed the House several times
with overwhelming margins, and it is supported by the SEC.
At the Bipartisan Policy Center's 5-year look-back at Dodd-Frank just
last week, the question was put to former Commodity Futures Trading
Commissioner Jill Sommers: What is yet to be done in Dodd-Frank that
needs to be done? Her answer: fixing the indemnification provision.
Here we are today, and we have an opportunity to do this with that
bill. Let me try to make this really simple.
A major objective of the Dodd-Frank Act was to improve transparency
and to eliminate systemic risk mitigation in global derivatives
markets. This bill is a technical fix to ensure that the goal of swaps
transparency is realized.
In fact, Dodd-Frank requires post-trade reporting to swap data
repositories. During the crisis, these SDRs did not exist.
As a matter of fact, to quote Warren Buffett when he described the
situation we were in, he said:
Only when the tide goes out do you discover who has been
swimming naked.
This is a really important feature in Dodd-Frank. However, as
written, a provision threatens the reporting regime and threatens to
fragment the collection of data by imposing an unnecessary requirement
on foreign SDRs and regulators that would impede compliance.
By eliminating this unnecessary requirement, this bill makes it
possible to achieve the goal of bringing comprehensive swap trade
information, transparency, and oversight to the global derivatives
markets.
Regardless of your position on derivatives or on Dodd-Frank, this
bill makes sense, and I urge all of my colleagues to support it.
Ms. MAXINE WATERS of California. Mr. Speaker, I have no additional
speakers.
I yield back the balance of my time.
Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, in closing, I want to thank
both the Democrats and the Republicans who have worked on this.
The House has acted several times in a bipartisan manner on this
legislation--420-2 on very similar legislation. We have passed this
multiple times; so I would just encourage all Members to support this
piece of legislation.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Virginia (Mr. Hurt) that the House suspend the rules and
pass the bill, H.R. 1847, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________