Reuters: Regulatory News: US seeks smoother international swaps data sharing

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US seeks smoother international swaps data sharing Apr 27th 2012, 23:20 Fri Apr 27, 2012 7:20pm EDT * CFTC to issue relief for overseas regulators * Will allow access US swaps data and avoid indemnity rules * Overseas regulators must have similar swaps reporting * Legislative fix also being considered By Alexandra Alper WASHINGTON, April 27 (Reuters) - The U.S. futures regulator plans to issue guidance next week that could make it easier for international regulators to share swaps data and get a better look at global risks. The U.S. Commodity Futures Trading Commission is expected to issue that guidance as early as Monday, Republican CFTC Commissioner Scott O'Malia said in an interview. It would exempt foreign regulators from signing burdensome indemnification agreements in exchange for access to data from U.S. swaps data repositories, as long as the foreign regulators build robust swaps reporting regimes themselves. During the 2007-2009 financial crisis, regulators were blindsided by the market damage tied to credit-default swaps like those used by insurer AIG. The indemnification agreements, which were called for in the 2010 Dodd-Frank financial oversight law, w ould make f oreign regulators liable fo r costs ar ising from lawsuits over the data that was shared. Foreign regulators and some lawmakers have criticized the i ndemnification agreements a s an obstacle to data sharing seen as critical for monitoring counterparty risk across the global financial system. "I believe the Commission is taking the right step to allay the concerns expressed by many foreign regulatory authorities," O'Malia will say in a concurring statement. CONGRESSIONAL SCRUTINY The indemnification provision has sparked sharp criticism from foreign regulators and U.S. policymakers. Some overseas regulators have said that anything that discourages the international exchange of swaps data could lead to overlapping data collection. They have also threatened to block U.S. access to data from their markets or encourage the creation of local trade repositories that would have no obligation to report to U.S. regulators. Ethiopis Tafara, director of the Securities and Exchange Commission's Office of International Affairs, said at a House Financial Services hearing in March that the indemnification agreements were a source of international tension. He also questioned whether the SEC even had the legal authority to enter into indemnity agreements. "The indemnification requirement interferes with access to essential information, including information about the cross-border OTC derivatives markets," said Tafara. "Removing the indemnification requirement would address a significant issue of contention with our foreign counterparts, while leaving intact confidentiality protections for the information provided." A bipartisan bill to repeal the provision passed out of the House Financial Services Committee in March but it is not on a fast track to passage. The CFTC took no position on the repeal bill. Link this Share this Digg this Email Reprints

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