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House panel approves bill limiting swaps regulation to domestic institutions

Jim Himes

On Tuesday, the House Financial Services Committee approved legislation in a 41-18 vote that would ultimately restrict the Dodd-Frank Act’s derivatives rules to apply only to domestic institutions.

The bipartisan measure would effectively exclude U.S. subsidiaries in foreign countries, as well as their clients, Bloomberg reports.

“This bill seeks to do something very, very narrow,” Representative Jim Himes (D-Conn.), a co-sponsor of the bill, said, according to Bloomberg. “The notion that this is creating an unregulated environment for anybody is flat-out wrong.”

Some financial institutions have voiced concern that the derivatives rules would harm their competitiveness should they be applied to overseas markets.

JPMorgan Chase & Co. Associate General Counsel Don Thompson said at a February Financial Services Committee hearing that if the Dodd-Frank derivatives rules applied to the international swaps market, it would “eviscerate our ability to serve clients overseas and cede the global market to foreign competitors,” Bloomberg reports.

The committee rejected an amendment to the bill that would authorize the Securities and Exchange Commission, as well as the Commodity Futures Trading Commission, to impose certain requirements on trades with those non-U.S. clients that present systemic risks.

Barney Frank, the co-author of the 2010 Dodd-Frank Act, said before the vote that it would be a “very very grave error” not to have such a safety net.

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