CONGRESSWOMAN ELISE STEFANIK
On Wednesday, June 12, 2013, the House will consider H.R. 742, the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013,under a suspension of the rules. The bill was introduced on February 15, 2013 by Rep. Rick Crawford (R-AR) and referred to the Committees on Agriculture and Financial Services, which held mark-ups and reported the bill by voice vote and a recorded vote of 52-0, respectively.
H.R. 742 repeals the indemnification requirements contained in Sections 725, 728, and 763 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203). These sections of the Dodd-Frank Act are related to swap data gathered by swap data repositories (SDRs) and derivatives clearing organizations (DCOs). While the indemnification requirements are repealed, the bill keeps in place the requirement that, before swap data entities are allowed to share information with government regulators, they must receive a written agreement stating that the regulator will abide by certain confidentiality agreements.
Swap data repositories (SDRs) store data and information regarding swap transactions. Prior to Dodd-Frank, SDRs regularly shared information with foreign regulators under international guidelines. This information is essential for foreign regulators to monitor for systemic risk.
Dodd-Frank added the requirement that prior to sharing information, U.S. registered SDRs are required to receive a written agreement from foreign regulators stating that they agree to indemnify the SDR and U.S. Commissions for any litigation expenses related to the sharing of information. However, the concept of indemnification is only well established in U.S. law and is virtually absent in foreign jurisdictions. This threatens to make data sharing arrangements with foreign regulators unworkable.
H.R. 742 ensures that essential international data sharing continues by removing this indemnification requirement.
CBO estimates that, “the net cost to the agency would be negligible.” While pay-as-you-go procedures apply because it increases federal liability, CBO estimates that implementing H.R. 742 would have, “an insignificant effect on direct spending and revenues.”