[Congressional Record (Bound Edition), Volume 159 (2013), Part 6]
[House]
[Pages 8741-8743]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1310
 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 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

[[Page 8742]]

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 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.''

                              {time}  1320

  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-

[[Page 8743]]

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.
  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.

                              {time}  1330

  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.

                          ____________________