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The Depository Trust & Clearing Corporation calls for OTC derivatives market transparency

Donald F. Donahue

The Depository Trust & Clearing Corporation pressured Congress on Wednesday to clear bipartisan legislation that would enhance transparency in the over-the-counter derivatives market and ensure the continuity of global swaps data.

Donald F. Donahue, the DTCC’s president and CEO, sanctioned The Swap Data Information Sharing Act that would ultimately eliminate indemnification mandates from the 2010 Dodd-Frank Act.

Under the Dodd-Frank Act, U.S. swap data repositories receive indemnification agreements from foreign regulators before data-sharing occurs. The elimination of such a mandate would move U.S. regulations closer to those of international data-sharing protocols developed by regulators worldwide.

Donahue said that “plenary access,” a requirement that U.S. SDRs provide U.S. regulators with direct access to their data, must also be addressed to prevent data fragmentation.

“Indemnification and plenary access must be dealt with together. Fragmentation would undermine the ability of regulators to obtain a comprehensive view of the global marketplace, which would impact their ability to see risk building up in the system and provide adequate market surveillance and oversight,” Donahue said. “While this legislation is a strong step in the right direction, it is one of two key technical corrections that is required to ensure regulators continue to have the highest degree of transparency into OTC derivatives markets.”

Donahue pressed Congress to amend the law to include clarification that regulators will have access only to the data in which the agency has interests.

“By amending and passing this legislation to address both indemnification and plenary access, Congress will help create the proper environment for the development of a global trade repository system to support systemic risk management and oversight,” Donahue said.

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