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February 22, 2010

Cover Sidebar: HR 3795 New Clearing Requirements

By Gregory Bresiger

Who is affected by Congress's would be new clearing rules and forced to use clearinghouses instead of the current bilateral system? Here is some of what the bill says on this point.

"Clearing Requirement. The [Securities and Exchange] Commission shall monitor swap activity and transaction data and by rule or regulation identify specific swap contracts that it determines are required to be cleared consistent with the public interest after taking into account the following factors:

"(A) The existence of significant notional exposures, trading liquidity and adequate pricing data;

"(B) The availability of one or more swap clearinghouses with the rule framework, capacity, operational expertise and resources, and credit support infrastructure to clear the contract on terms that are consistent with the material terms and trading conventions on which the contract is then traded;

"(C) The impact on the mitigation of systemic risk, taking into account the size of the market for such contract and the resources of the swap clearinghouses available to clear the contract."

 

Source: House Financial Services Committee

 

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