本文发表在 rolia.net 枫下论坛WASHINGTON (MarketWatch) -- Treasury Secretary Timothy Geithner on Friday defended the White House's plan for heightened regulation of over-the-counter derivatives, in anticipation of opposition by some lawmakers who believe there is a loophole when it comes to trillions of dollars in the opaque market of contract swaps.
Geithner's plan calls for greater reporting, capital, leverage and disclosure standards for all derivative traders and dealers, especially OTC swaps.
However, some lawmakers are seeking to have these specialized derivatives cleared through more transparent clearinghouses, which serve as an intermediary between buyers and sellers in transactions. The Obama administration plan backed by Geithner seeks only to have standardized clearinghouses, not tailored swaps, traded through clearinghouses.
Reuters
Treasury chief Timothy Geithner
"Our plan will provide for strong regulation and transparency for all OTC derivatives, regardless of the reference asset, and regardless of whether the derivative is customized or standardized," Geithner told lawmakers at a joint hearing hosted by the House Financial Services and the House Agriculture committees.
The White House unveiled its proposal last month, with a specific legislative proposal expected by September. The next step is for Congress to draft legislation.
Opponents believe that the proposal will drive more traders to move from standardized products to OTC transactions, in part, because of lower costs and less visibility.
"The sophistication and creativity of those in these markets will find another way to do what they want to do," said Rep. Maxine Waters, D-Calif., adding that she did not believe the proposal goes far enough. "We did well as a country before derivatives. Why not ban credit default swaps?"
House Agriculture Committee Chairman Collin Peterson, D-Minn., raised questions about how the government proposal doesn't require OTC derivatives to go through clearinghouses, arguing it "raised even more questions to me about what is going on here."
Peterson has introduced legislation that would require clearinghouses handle most derivatives. The Commodity Futures Trading Commission would have the authority to put greater leverage standards on any swaps that don't go through clearinghouses.
Dealing in theoreticals
Peterson said he worried about what would happen in situations where a clearinghouse, which is a private entity, determines that there is too much risk and not enough profit in clearing some standardized products, limiting the transparency of swaps.
"Do you think a central clearing counterparty should be required to accept the product?" asked Peterson.
Geithner said he didn't think a clearinghouse would choose not to accept a product. He said new heightened capital requirements for OTC dealers and traders would drive more swaps onto clearinghouses but declined to comment on the specific capital limits he would like to see imposed on OTC derivatives.
"To avoid the risk that our definition of standardized is arbitraged and people try to get around that definition and design customized products to escape the protections that come with that, we will propose to put higher capital requirements on customized products to limit risk," Geithner said.
He also defended the market for specialized derivative contracts, which he argued would disappear if all swaps were required to go through clearinghouses.
"We are not prepared to ban customized products because we believe there are risks that can be limited because of customized products," Geithner said. "But we counter that with new restrictions on tailored products."
Rep. Frank Lucas, R-Okla., ranking member sitting on the Agriculture panel, indicated he supported keeping tailored swaps off of clearinghouses. "The situations are so unique that we need to keep them?" Lucas said.
New policing powers
Geithner also said the proposal seeks to empower regulators to police any attempts by market participants to use "spurious customization" to avoid trading through clearinghouses.
Another way the proposal seeks to limit migration from standardized to tailored products relates to counterparties. Geithner said the proposal will raise capital requirements for counterparties regarding all customized and non-centrally cleared OTC derivatives, a prospect he argues could drive more swaps through clearinghouses.
Roughly half of all derivatives transactions take place in the over-the-counter market. Already a number of groups are setting up swap clearinghouses, but derivatives investors, so far, are not required to trade using them.
Premium on disclosure
The plan also calls for confidential disclosure of transactions and positions of derivatives traders and dealers, while the public will have access to aggregated data on positions and trading volume, Geithner said.
Greater coordination between the Securities and Exchange Commission and Commodity Futures Trading Commission is also expected to improve oversight of the opaque swaps market, he noted. The measure seeks to expand enforcement powers for both agencies.更多精彩文章及讨论，请光临枫下论坛 rolia.net
Geithner's plan calls for greater reporting, capital, leverage and disclosure standards for all derivative traders and dealers, especially OTC swaps.
However, some lawmakers are seeking to have these specialized derivatives cleared through more transparent clearinghouses, which serve as an intermediary between buyers and sellers in transactions. The Obama administration plan backed by Geithner seeks only to have standardized clearinghouses, not tailored swaps, traded through clearinghouses.
Reuters
Treasury chief Timothy Geithner
"Our plan will provide for strong regulation and transparency for all OTC derivatives, regardless of the reference asset, and regardless of whether the derivative is customized or standardized," Geithner told lawmakers at a joint hearing hosted by the House Financial Services and the House Agriculture committees.
The White House unveiled its proposal last month, with a specific legislative proposal expected by September. The next step is for Congress to draft legislation.
Opponents believe that the proposal will drive more traders to move from standardized products to OTC transactions, in part, because of lower costs and less visibility.
"The sophistication and creativity of those in these markets will find another way to do what they want to do," said Rep. Maxine Waters, D-Calif., adding that she did not believe the proposal goes far enough. "We did well as a country before derivatives. Why not ban credit default swaps?"
House Agriculture Committee Chairman Collin Peterson, D-Minn., raised questions about how the government proposal doesn't require OTC derivatives to go through clearinghouses, arguing it "raised even more questions to me about what is going on here."
Peterson has introduced legislation that would require clearinghouses handle most derivatives. The Commodity Futures Trading Commission would have the authority to put greater leverage standards on any swaps that don't go through clearinghouses.
Dealing in theoreticals
Peterson said he worried about what would happen in situations where a clearinghouse, which is a private entity, determines that there is too much risk and not enough profit in clearing some standardized products, limiting the transparency of swaps.
"Do you think a central clearing counterparty should be required to accept the product?" asked Peterson.
Geithner said he didn't think a clearinghouse would choose not to accept a product. He said new heightened capital requirements for OTC dealers and traders would drive more swaps onto clearinghouses but declined to comment on the specific capital limits he would like to see imposed on OTC derivatives.
"To avoid the risk that our definition of standardized is arbitraged and people try to get around that definition and design customized products to escape the protections that come with that, we will propose to put higher capital requirements on customized products to limit risk," Geithner said.
He also defended the market for specialized derivative contracts, which he argued would disappear if all swaps were required to go through clearinghouses.
"We are not prepared to ban customized products because we believe there are risks that can be limited because of customized products," Geithner said. "But we counter that with new restrictions on tailored products."
Rep. Frank Lucas, R-Okla., ranking member sitting on the Agriculture panel, indicated he supported keeping tailored swaps off of clearinghouses. "The situations are so unique that we need to keep them?" Lucas said.
New policing powers
Geithner also said the proposal seeks to empower regulators to police any attempts by market participants to use "spurious customization" to avoid trading through clearinghouses.
Another way the proposal seeks to limit migration from standardized to tailored products relates to counterparties. Geithner said the proposal will raise capital requirements for counterparties regarding all customized and non-centrally cleared OTC derivatives, a prospect he argues could drive more swaps through clearinghouses.
Roughly half of all derivatives transactions take place in the over-the-counter market. Already a number of groups are setting up swap clearinghouses, but derivatives investors, so far, are not required to trade using them.
Premium on disclosure
The plan also calls for confidential disclosure of transactions and positions of derivatives traders and dealers, while the public will have access to aggregated data on positions and trading volume, Geithner said.
Greater coordination between the Securities and Exchange Commission and Commodity Futures Trading Commission is also expected to improve oversight of the opaque swaps market, he noted. The measure seeks to expand enforcement powers for both agencies.更多精彩文章及讨论，请光临枫下论坛 rolia.net