Over-the-Counter Derivatives Markets and the Commodity Exchange Act: Report of the President's Working Group on Financial Markets

摘要

Last year, Congress indicated that the Presidents Working Group on Financial Markets (the Working Group) Should work to develop policy with respect to over-the-counter (OTC) derivative instruments, and the Chairmen of the Senate and House Agriculture Committees requested that the Working Group conduct a study of OTC derivatives markets and provide legislative recommendations to Congress. This Working Group report focuses on changes to the Commodity Exchange Act (the CEA) that are necessary to promote innovation, competition, efficiency, and transparency in OTC derivatives markets, to reduce systemic risk, and to allow the United States to maintain leadership in these rapidly developing markets. The Working Group has concluded that under many circumstances, the trading of financial derivatives by eligible swap participants4 should be excluded from the CEA. To do otherwise would perpetuate legal uncertainty or impose unnecessary regulatory burdens and constraints upon the development of these markets in the United States. The Working Group has also concluded that it is important to remove legal impediments to the development of electronic trading systems, which have the potential to increase market liquidity and transparency, and appropriately regulated clearing systems, which can reduce systemic risk by allowing for the mutualization of risks among market participants and by facilitating offset and netting of contractual obligations.