The House Subcommittee on Capital Markets, Securities and Investments held a hearing last week, which focused on the need for legislative reforms that would provide greater economic opportunity for businesses that use derivatives.
“It is important to note that derivatives are a vital part of the healthy functioning of our global economy,” Subcommittee Chairman Bill Huizenga (R-MI) said. “Companies of all sizes in Michigan and across the United States use derivatives to better manage the risks that they face every day. Derivatives help to ensure that prices are stable and that customers are not subject to immense market fluctuations. We must work to ensure that the derivatives market is appropriately regulated and is working efficiently to benefit of main street investors.”
Thomas Deas, chairman of the National Association of Corporate Treasurers, said Dodd-Frank mandates have resulted in increased costs for businesses’ risk mitigation activities.
“The cumulative effects of these burdens and costs have threatened the ability of American businesses to affordably protect against risks associated with their day-to-day commercial operations,” Deas said, speaking on behalf of the Coalition for Derivatives End-Users.
Scott O’Malia, chief executive officer of the International Swaps and Derivatives Association (ISDA), favors regulatory reform for derivatives.
“ISDA and its member firms support regulatory reform that mitigates systemic risk by reducing counterparty credit risk and increasing regulatory transparency. Some of the current regulatory framework for the swaps markets could, however, be simplified to harmonize requirements, reduce cost and complexity and provide relief to smaller market participants and end-users,” O’Malia said.