SEC international affairs head Tafara calls for amendment to swap-data rules

Ethiopis Tafara

Ethiopis Tafara, the Securities and Exchange Commission’s head of international affairs, called for an amendment on Tuesday to the 2010 Dodd-Frank Act to eliminate data-sharing hurdles in the $708 trillion global swaps market.

Under the Dodd-Frank Act, foreign regulators, before data is shared, are required to underwrite litigation costs and swap-data repositories, a requirement that may undercut regulators’ access to data in storage areas like the Depository Trust and Clearing Corp. as they scramble to enforce regulations intended to enhance transparency and reduce risk, Bloomberg reports.

Tafara explains that such a requirement ultimately impedes regulators’ access to crucial information due to many foreign governments’ inability to provide assurance.

“In removing the indemnification requirement, Congress would assist the SEC, as well as other U.S. regulators, in securing the access it needs to data held in global trade repositories,” Tafara said in testimony before the House Financial Services subcommittee, according to Bloomberg.

Legislation to repeal the indemnification requirement is already underway by the Republican-controlled House subcommittee. The Dodd-Frank Act was intended to increase transparency in the swaps market, requiring all trade-related information to be recorded in data repositories.

“Previous attempts by the U.S. agencies to ‘fix’ indemnification through regulation did not work,” Craig Donner, a DTCC spokesman, said, Bloomberg reports. “The only viable solution to prevent data fragmentation is a straight legislative fix that removes the provision from the law.”

The Commodity Futures Trading Commission is currently working with the SEC on the issue.

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