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  • Statement of Concurrence for the Proposed Interpretative Statement Regarding Confidentiality and Indemnification Provision in the Dodd-Frank Wall Street Reform and Consumer Protection

    Commissioner Jill E. Sommers

    May 1, 2012

    Washington, DC – I concur in the issuance of this Proposed Interpretative Statement Regarding the Confidentiality and Indemnification Provisions of Section 21(d) of the Commodity Exchange Act (Proposed Interpretive Statement). It provides some additional clarification with respect to how the Commission intends to interpret the application of the Section 21(d) indemnification provisions beyond what the Commission stated when it finalized the swap data repository (SDR) rules. See Swap Data Repositories: Registration Standards, Duties and Core Principles, 76 Fed. Reg. 54,538 (Sept. 1, 2011). However, a legislative fix is the only real solution to providing appropriate regulators, both foreign and domestic, with timely access to relevant data. I agree with Commissioner O’Malia that the Commission should publicly support repeal of the indemnification provisions, and note that the SEC has already done so.

    When finalizing the SDR rules, the Commission stated that a foreign regulator may have direct access to confidential swap data reported to and maintained by an SDR registered with the Commission without executing a Confidentiality and Indemnification Agreement when the SDR is also registered with the foreign regulator and the foreign regulator is acting in a regulatory capacity with respect to the SDR. See id. at 54,554. The Proposed Guidance clarifies that this should be the case even if the data the foreign regulator seeks also has been reported pursuant to the CEA and Commission regulations.

    Aside from making this point, the Proposed Interpretive Statement does not provide any information that cannot be otherwise gleaned from the SDR final rules, with one notable exception. The final SDR rules define an “Appropriate Foreign Regulator” as one that has supervisory authority over an SDR that is registered with the foreign regulator and with the CFTC. The Proposed Interpretive Statement expands this concept to SDRs that are registered, recognized, or otherwise authorized in a foreign jurisdiction’s regulatory regime. Thus, registration and recognition are equivalent. This is a welcome clarification and a step in the right direction.

    I should note that the indemnification provisions of Section 21(d) may have an adverse effect on U.S. regulators too. The Proposed Interpretive Statement touches on a distinction drawn in Part 49 between “Appropriate Domestic Regulators,” which include a number of domestic regulatory authorities, and an “Appropriate Domestic Regulator with Regulatory Responsibility over a Swap Data Repository” (a single entity subcategory of Appropriate Domestic Regulators, namely, the Securities and Exchange Commission (SEC)). Only the latter category of domestic regulator (i.e. the SEC) is exempt from the indemnification provisions of Section 21(d). While it makes sense that the SEC should be able to receive SDR data directly from an SDR absent an indemnification agreement, I encourage comments as to whether other Appropriate Domestic Regulators should have similar access.

    Last Updated: May 2, 2012