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SPEECHES & TESTIMONY

  • Statement on Support of the Dodd-Frank Rulemaking of Chairman Gary Gensler

    Statements for the record on each rule:

    Orderly Liquidation Termination Provision in Swap Trading Relationship Documentation Requirements for Swap Dealers and Major Swap Participants

    I support the proposed rulemaking that establishes documentation requirements for swap dealers and major swap participants, ensuring consistency with statutory provisions in the event of an orderly liquidation of a swap dealer or major swap participant. The proposed regulation requires the inclusion of a provision in the swap trading relationship documentation that would inform counterparties that, if a swap dealer or major swap participant becomes a covered financial company subject to the resolution authority of the Federal Deposit Insurance Corporation, there may be a one-day stay on the ability of its counterparties to terminate, liquidate or net their uncleared swaps. The proposed rulemaking should lower litigation risk during times of significant market stress and promote an orderly and effective resolution process for large financial entities.

    Agricultural Swaps and Commodity Options

    I support the proposed rulemaking to authorize agricultural swap and commodity option transactions and subject them to the same rules applicable to all other swaps. The Dodd-Frank Act prohibits such transactions if the Commission does not specifically authorize them. The Commission was informed on this proposal by the public comments received in response to an advanced notice of proposed rulemaking published in September of last year that addressed agricultural swaps.. Those comments overwhelmingly supported treating agricultural swaps similarly to the treatment of other swaps brought under regulation by the Dodd-Frank Act. Agricultural producers, packers, processers and handlers will benefit from the ability to use agricultural swaps to hedge their risk and also will benefit from the transparency brought forth under the Dodd-Frank Act. I believe this proposed rulemaking provides an appropriate regulatory framework for the transaction of agricultural swaps and commodity options, and I look forward to hearing the public’s views on this matter.

    Last Updated: January 20, 2011



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