SIFMA Acting President and CEO Testifies Before House Agriculture Commitee on Dodd-Frank Title VII

SIFMA Acting President and CEO Kenneth E. Bentsen, Jr. provided the attached testimony before the U.S. House Agriculture Committee for a hearing to examine legislative improvements to Dodd-Frank Title VII ("Wall Street Transparency and Accountability"), which deals primarily with derivatives. While affirming that SIFMA supports the intended goals of the Act, Bentsen called attention to the fact that, if Title VII is implemented incorrectly, it may cause more harm than good, since incorrect implementation has the potential to detrimentally limit the availability and increase the cost of derivatives.

CEO Bentsen focused the rest of his testimony on the following issues that are the topic of legislation currently pending before the Committee:

• The Swap Push-Out Rule: According to CEO Bentsen, Section 716 of the Act would weaken financial stability, as well as significantly increase the cost to banks of providing customers with swap products. SIFMA encourages the Committee to favorably report the bill (H.R. 992) introduced by Congressman Hultgren that would modify the push-out provision to ensure that federally insured financial institutions can continue to conduct risk-mitigation efforts for clients;
• Cross-Border Impact of the Act: According to CEO Bentsen, CFTC's proposed guidance on the cross-border impact of its swaps rules inappropriately constructs the restriction placed by Congress on its jurisdiction over swap transactions outside the U.S., and that CFTC has a very broad definition of "U.S. Person." SIFMA supports a final definition of "U.S. Person" that focuses on real, rather than nominal, connections to the U.S. and that is simple, objective and determinable. SIFMA encourages the Committee to support the bill (H.R. 3283) introduced by Congressmen Hines and Garrett, which would permit non-U.S. swap dealers to comply with capital rules in their home jurisdiction that are comparable to U.S. capital rules and would also prevent the requirement that registered swap dealers post separate margins for each jurisdiction where they are regulated;
• Swap Execution Facilities (SEFs): CEO Bentsen believes that CFTC's definition of "SEF" will drive up the costs of transactions in addition to harming corporations and other swap users. CEO Bentsen pointed out a bill supported in the House Financial Services Committee (H.R. 2586) last Congress, to require CFTC and the SEC to adopt SEF rules allowing the swaps markets to naturally evolve to the best form of execution. SIFMA urges Congress to support similar legislation in this Congress;
• Inter-Affiliate Swaps: SIFMA urges the Committee to support the bill (H.R. 677) introduced by Congressman Stivers, the Inter-Affiliate Swap Clarification Act, that would exempt certain inter-affiliate transactions from the margin, clearing, and reporting requirements under Title VII;
• Cost-Benefit Analysis: SIFMA urges the Committee to support the bill (H.R. 1003) introduced by Congressman Conaway that would require the CFTC's cost-benefit analysis to be both quantitative and qualitative and specifies in greater detail the costs and benefits that the CFTC must take into account.

Click here to view testimony in full (links externally to SIFMA website).See also: Information Regarding the Hearing - "Examining Legislative Improvements to Title VII of the Dodd-Frank Act."