--President Stabenow delivers keynote speech at the forum sponsored by the DTCC, MFA and institutional investors
WASHINGTON--(BUSINESS WIRE)--effects of the Dodd-Frank on safety and liquidity of the swaps markets for end-users and buy-side firms continues to be a subject of hot debate that more than 100 representatives from the communities ' financial and legal areas of concern and possible solutions in a forum today sponsored by () succeeded medium-AssociationMFA), institutional investors and the Depository Trust & Clearing Corporation (DTCC).
-While the Dodd-Frank is intended to protect the economy and the OTC-derivatmarknader and make their hedging set markets more transparent and liquid, there is concern within the industry over the potential unintended consequences of the new rules, says Michael Bodson, DTCC's chief operating officer, opened the Conference. "This forum will identify key issues and describe possible elements of resolutions so that the rule makers and legislators have input and feedback that they need when they go ahead with implementing Dodd-Frank."
"We appreciated the opportunity for market participants and policy-makers to continue the dialogue on the central clearing and openness, which strongly supports both MFA because of their important role in reducing systematic, operational and counterparty risk for hedge funds and institutional investors," said Richard Baker, president and CEO for the managed funds Association.
"Our derivatives markets are playing important roles in helping organizations manage commercial risks, gain access to financing and effectively deploy capital. Discussions that today's help market participants and policy-makers both considers the potential for unintended consequences which we all aspire to have markets that are liquid and safe, providing a level playing field for all participants, and supported by prudent regulation, "said John Gidman of Loomis Sayles & Company and Chairman of the Association of institutional investors.
The Conference's keynote address was given by Senator Debbie Stabenow (D-MI), Chairman of the u.s. Senate Committee on agriculture, nutrition and forestry. The Committee is responsible to verify the implementation of the Dodd-Frank and, in particular, title VII, which renews the framework for the over-the-counter (OTC) derivatives market.Congressman Jim Himes (D-CT), a member of the House Committee on financial services, including comments delivered during Forum and participated in a Q&A session with the audience.
In addition, the event featured two panel discussions that included representatives from the laws, regulations and administrative staffs in charge of the Dodd-Frank, as well as leading representatives from asset managers, hedge funds, Government sponsored entities and corporate end users from trading, hedging, risk management, legal and compliance and operational areas. The panels focused on howBefore and after trade rules as a result of new trading and clearing rules affect liquidity and risk of inadvertent disclosure. Companies manage changes in security and the default for both centrally cleared and bilateral derivatives.
Openness to mitigate systemic risk
During his initial comments reinforced Bodson that the key to mitigating systemic risk in the swaps market lies in giving regulators open access to extensive market information. He noted the importance of having all underlying position data into a single, central swaps data repository (SDR) to ensure that all corporate positions can be seen from a central point of vantage.
Bodson drew attention to the role of DTCC's Trade Information Warehouse (TUI) played in increasing transparency in the default credit swaps (CDS) market during the economic crisis. The location of centralized database and its users cover all the major OTC derivatives dealers and more than 1,800 companies that buy-side and other market participants in more than 50 countries. It has around 2,3 million contract with a gross notional value of $ 29 trillion.
Bodson also stressed that the objective of transparency across the entire OTC derivatmarknaden will require significant cooperation between stakeholders and regulators. He added that a critical variable in TUI's success was that DTCC is not a traditional commercial entity, but rather an industry-regulated utilities, with buy-side firms, companies that sell-side and self-regulatory bodies which the interested parties.
-It was important for all parties to commercial interests have been removed from which all sides agree is — and should continue to be – mainly a regulatory and supervisory authorities support function, "said Bodson.
About DTCC
DTCC, through its subsidiary, clearance, settlement and information services for equities, corporate and municipal bonds, Government and mortgage-backed securities, money market instruments and over-the-counter derivatives. DTCC is also a leading processor of mutual funds and insurance transactions, funds and carriers with their distribution networks. DTCCS depository provides custody and Asset Servicing for more than 3.6 million securities from the United States and 121 other countries and territories, valued at US $ 36.5 billion. 2010 Fast DTCC almost US $ 1,66 quadrillion in securities transactions. DTCC has operating facilities and data centers in multiple locations in the United States and abroad. For more information, visit www.dtcc.com.