Depository Trust & Clearing Corporation (DTCC) President and CEO Donald F. Donahue testified before the Capital Markets and Government Sponsored Enterprises Subcommittee of the U.S. House of Representatives today, urging Congress to pass legislation to prevent fragmentation of global swaps data and ensure transparency in the over-the-counter (OTC) derivatives markets.
Donahue endorsed the The Swap Data Information Sharing Act, which would remove the indemnification provisions from the Dodd-Frank Act, which require U.S.-based swap data repositories (SDR) to receive written indemnification agreements from non-U.S. regulators before sharing critical market data with them.
Donahue also petitioned the committee to clarify points on the provision of plenary access, which requires U.S.-registered repositories to provide regulators in the U.S. with “direct electronic access” to their data. Non-U.S. regulators are concerned that U.S. agencies may interpret that to include swap data from repositories that are not governed by U.S. regulations, DTCC says.
“Indemnification and plenary access must be dealt with together,” Donahue said. “Fragmentation would undermine the ability of regulators to obtain a comprehensive view of the global marketplace, which would impact their ability to see risk building up in the system and provide adequate market surveillance and oversight. While this legislation is a strong step in the right direction, it is one of two key technical corrections that is required to ensure regulators continue to have the highest degree of transparency into OTC derivatives markets.”
(CG)