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House to vote on bills to repeal Dodd-Frank derivatives provisions

Scott GarrettThe House Financial Services Committee will vote on Wednesday on a series of bills that would amend provisions in the Dodd-Frank Act related to derivatives.

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.

“Dodd-Frank gave the SEC and the CFTC broad latitude to get the rules right,” Garrett said. “Unfortunately, after their proposals were released, virtually the entire market, from buy-side asset managers, pension funds, and commercial end-users, to sell-side dealers and even prospective swap execution facilities, told me that regulators got it wrong."

Another bill expected to receive a committee vote is sponsored by Rep. Steve Stivers (R-Ohio). It would repeal Section 716 of Dodd-Frank, otherwise known as the "swap push out" provision.

Garrett said that Stivers' bill is a “common-sense solution to address inter-affiliate trades.”

Rep. Michael Grimm (R-N.Y.) also sponsored a piece of legislation that targets Dodd-Frank's derivatives language and is expected to receive a committee vote.

Grimm’s bill 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.

“Dodd-Frank over-reached when it included true end-users who simply use derivatives to hedge risk and stabilize prices, and had nothing to do with the financial crisis," Grimm said. “It imposes barriers to job creation, which is why we have to remove the onerous margin requirements imposed on companies and firms."
 

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