UPDATE=US House Defeats Plan To Move Uncleared Swaps Onto Trading Venues
December 10 2009 - 10:45PM
Dow Jones News
The U.S. House rejected a proposal backed by the chairman of the
federal futures regulator to require some uncleared swaps to still
be traded on regulated, transparent platforms.
Reps. Bart Stupak (D., Mich.) and Chris Van Hollen (D., Md.),
the drafters of the proposal, sought to include it into a broader
bill to overhaul the financial regulatory system. It was defeated
98-330.
The plan would have required many commercial hedgers to execute
swap trades on trading venues even if those products aren't cleared
by a clearinghouse. The requirement would only apply in cases where
a trading facility listed the swap.
"This amendment strengthens what is already a good bill," Rep.
Van Hollen said on the floor Thursday. "What it calls for is simply
greater transparency in transactions."
The proposal is widely opposed by companies that use swaps to
hedge risks, but was supported by Commodity Futures Trading
Commission Chairman Gary Gensler in a letter he sent to Stupak and
Van Hollen on Thursday.
House Agriculture Chairman Collin Peterson (D., Minn.), one of
the chief drafters of the swaps section of the financial bill, said
he opposed the measure because "the end-user community doesn't buy
it."
Meanwhile, a separate measure proposed by Stupak, Van Hollen and
several other lawmakers to allow regulators to ban abusive swaps
was also defeated 150-279. That provision came about amid concern
about the trading of "naked" credit-default swaps, a type of swap
investors can use to bet against the creditworthiness of a company
without having an underlying interest in the bonds.
A final vote on the broader House financial bill is expected
Friday.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634;
sarah.lynch@dowjones.com