DTCC Connection

Apr 14, 2014 • DTCC Connection

Customer Protection and End-User Relief Act (H.R. 4413) Receives House Committee Approval

by Theresa Pagliocca

On April 9, the House Agriculture Committee unanimously approved bipartisan legislation that would reauthorize the Commodity Futures Trading Commission (CFTC) through 2018. The Customer Protection and End-User Relief Act (H.R. 4413) would also amend certain CFTC provisions included in the Dodd-Frank Act.

 

H.R. 4413 was introduced by House Agriculture Committee Chairman Frank Lucas (R-OK), Ranking Member Collin Peterson (D-MN), General Farm Commodities and Risk Management Subcommittee Chairman Michael Conaway (R-TX) and Subcommittee Ranking Member David Scott (D-GA).

 

In advance of drafting legislation, the House Agriculture Committee, the Subcommittee on General Farm Commodities and Risk Management, and the Senate Agriculture Committee held a series of hearings with a variety of stakeholders to examine the future of the agency. At the request of the Senate Agriculture Committee, DTCC submitted a letter outlining recommendations regarding reauthorization of the CFTC. 

 

Indemnification Legislation

A key component of H.R. 4413 is the addition of legislation that passed the House Agriculture Committee and/or the U.S. House of Representatives with overwhelming bipartisan support, including the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013 (H.R. 742). This proposed legislation, which passed the House 420-2, would resolve issues surrounding the indemnification provisions and confidentiality requirements of Dodd-Frank.

 

DTCC has been a strong advocate of H.R. 742 and has testified multiple times in support of its passage. In 2013, Larry Thompson, DTCC General Counsel, testified before the House Agriculture Committee and Chris Childs, DTCC Deriv/SERV’s Global Chief Operating Officer appeared before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises in support of the legislation.

 

H.R. 742 would remove the indemnification provisions from sections 728 and 763 of the law and help ensure that regulators and the public continue to have access to a consolidated and accurate view of the global marketplace, including concentrations of risk and market exposures. For more information regarding indemnification, read Thompson’s article, “Implementing the Vision of Financial Reform” that appeared in The Hill’s Congress Blog in May 2013.

 

Prior to the April 9 House Agriculture Committee vote, DTCC submitted a letter of support for H.R. 4413 and applauded the inclusion of the Swap Data Repository and Clearinghouse Indemnification Correct Act of 2013. In the letter, Thompson stated, “H.R. 4413 would improve transparency, accountability, and economic analysis at the Commodity Futures Trading Commission (“CFTC”) and harmonize processes between the CFTC and the Securities and Exchange Commission, ensuring that all derivatives market participants can rely on a consistent rule of law.”

 

Next Step: House Review

With approval by the House Agriculture Committee, H.R. 4413 now advances to the full House for review. The Senate Agriculture Committee has not yet introduced a companion bill to H.R. 4413.

 

The Need for Reauthorization

  • The Food, Conservation, and Energy Act of 2008, also known as the 2008 Farm Bill, reauthorized the CFTC for a period of five years.
  • The authority expired on September 30, 2013 although the CFTC can continue to operate.

 

 

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