It was the legislative equivalent of trying to find a needle in a haystack, but in this case the needle kept popping up. Regardless of who read through the more than 800 pages of the U.S. Dodd-Frank Act, it seemed that the team at DTCC kept halting at the same brief section of the bill. Was it possible that these seemingly innocuous provisions, tucked deep inside the legislation, could undermine one of the core tenets of the massive reform bill – to bring greater transparency and risk mitigation to the more than $500 trillion global over-the-counter (OTC) derivatives markets?

“We couldn’t believe it,” said Larry Thompson, DTCC Vice Chairman and General Counsel. “On the one hand, the bill mandated the reporting of all swap transactions to swap data repositories (SDR) to ensure regulators and the public had a clear view into the global marketplace. But on the other hand, these small provisions would require SDRs to obtain indemnification agreements from regulators before sharing data with them. In reality, these provisions would block regulatory access to data held in SDRs and hinder data sharing among U.S. regulators and policymakers globally.”

More than five years after passage of the bill, it’s still not entirely clear why Congress included the indemnity requirement in the first place. Like so many other legislative mysteries, this one has never been solved. But as Thompson notes, “how it got into the legislation was less important than how we could get it removed.”

As Thompson and his team researched the law, their initial concerns were verified. While the indemnification provisions were meant to protect the confidentiality and safety of data reported to SDRs, regulators would be unable to provide the required legal guarantee for a variety of reasons. And without an indemnity agreement, U.S. SDRs could not share data, which prevented regulators from having access to the information they needed to effectively conduct market surveillance and prevent the build-up of risk in the system.

“Congress deserves credit for requiring trade reporting by financial firms, but the indemnity provisions ran contrary to the original intent of Dodd-Frank,” said Thompson. “This section of the bill was a road block on the regulatory community’s path to mitigating risk and averting a future financial crisis.”

DTCC quickly raised a red flag on Capitol Hill and voiced concerns in Brussels and in legislative centers across Asia to draw attention to the problem and build support for a solution. Reactions were swift in the U.S. and abroad, but the gears of government didn’t move as quickly. In the years since the passage of Dodd-Frank, the U.S. House of Representatives passed a legislative fix several times, but moving the measure in the Senate proved challenging – until 2015. After more than five years of collaboration and coalition building on the part of DTCC and many others, President Obama signed into law legislation that removed the indemnity requirement from Dodd-Frank.

“It was a terrific moment, the culmination of years of work on the part of so many people to bring greater transparency to this market and protect the investing public,” Thompson said. “We are proud of our role in this effort, but we recognize there is still more work that needs to be done to fully realize the transparency and risk mitigation goals of the Group of 20 and policymakers globally.”