Thank you for holding today’s hearing to discuss legislative proposals to amend or repeal provisions in Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The Depository Trust & Clearing Corporation (DTCC) and its subsidiary, DTCC Data Repository (U.S.) support efforts to improve the effectiveness of this landmark legislation, particularly in areas related to regulators’ ability to access and utilize a global data set for systemic risk oversight and mitigation purposes.
The Depository Trust & Clearing Corporation (DTCC) supports efforts to improve the effectiveness of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), particularly in areas related to regulators’ ability to access and utilize a global data set for systemic risk oversight and mitigation purposes.
The Depository Trust and Clearing Corporation (DTCC) today testified before a Senate Committee that the company is fully prepared to meet the September deadline for compliance with new swap data reporting requirements in the Dodd-Frank Act. During a hearing of the Senate Committee on Agriculture, Nutrition and Forestry, Larry Thompson told the Committee that two DTCC subsidiaries have already applied for registration with the Commodity Futures Trading Commission (CFTC) to operate as swap data repositories for all OTC derivatives asset classes.
Thank you for scheduling today’s hearing on the important issue of cyber security and the U.S. capital markets. The Committee’s strong leadership on this issue has been critical in helping to raise awareness of the serious threats posed by cyber-attacks on the financial system and fostering dialogue among the private and public sectors on effective strategies to minimize these risks.
The House Agriculture Committee’s leadership is vital as there is a clear need to shine a light on these technical provisions of the DFA – provisions that, if not addressed, risk decreasing the current level of transparency into OTC derivatives markets. Having a bipartisan group of Members in both the House and Senate recognize the unintended consequences of these provisions and commit to working within Congress and with policymakers internationally to develop a mutually agreeable resolution is very promising.
Over the past year, DTCC, among others, has been raising concerns over the impact of the DFA’s broad extraterritorial reach, particularly as it relates to the confidentiality of market data and the indemnification agreement provisions of the law. These concerns have been echoed by regulatory officials and policymakers globally, including by representatives of the European Parliament, European Commission and Council, by Asian governments and by both Republican and Democratic Members of the U.S. Congress.
DTCC remains concerned about the combined impact of the DFA’s broad extraterritorial reach and the confidentiality and indemnification agreement provisions. These provisions are fundamentally unworkable, as they do not recognize either foreign legal systems, or the inability of the U.S. to accept reciprocal demands from foreign entities. For reasons set forth in this statement, these provisions risk fragmenting the global data for over-the counter (OTC) derivatives and undermining efforts to increase market transparency and to mitigate risk in this market.
February 8, 2012