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House Financial Services Committee approves bills to weaken derivatives rules

Scott GarrettThree bills designed to ease derivatives rules established by the Dodd-Frank Act were approved during a markup of the House Financial Services Committee on Wednesday.

One bill, introduced by Rep. Scott Garrett (R-N.J.), would prohibit financial regulators from obligating swap execution facilities from having a certain number of participants, according to FiNCAD.com.

Another bill, sponsored by Rep. Steve Stivers (R-Ohio), would repeal Section 716 of Dodd-Frank, otherwise known as the "swap push out" provision.

The committee also approved Rep. Michael Grimm’s (R-N.Y.) legislation, which would end the existing margin requirement that requires all end users or certain commercial and industrial companies that use derivatives to hedge risk to put aside capital before engaging in trades.

The Securities Industry and Financial Markets Association released a statement in support of the three measures on Wednesday and urged full House and Senate approval, according to AdvisorOne.com.

Even if the bills are approved by the Republican-controlled House and moved to the Senate, it is unlikely that they will reach President Obama’s desk because the Senate still has a Democratic majority.

The bills were introduced as part of a Republican effort to loosen Dodd-Frank Act regulations instead of legislating a repeal of the entire bill.

Wayne Abernathy, the American Banker’s Association executive vice-president for financial institutions policy and regulatory affairs, said that Dodd-Frank is "in the implementation phase – the operation has begun. Once you start operating on a patient, you don’t say, ‘You know, we’ve changed our mind, close him up,’" according to FiNCAD.com.

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