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Corn+Soybean Digest

House Agriculture Approves Swaps Regulation Legislation

The House Agriculture Committee has approved legislation that would bring unregulated over-the-counter (OTC) products, such as swaps, under federal oversight for the first time. By a voice vote, the committee approved an amendment in the nature of a substitute to H.R. 3795, legislation that will increase transparency in and strengthen the oversight of both regulated exchanges and OTC derivatives markets.

The bill institutes a clearing and trading requirement for all OTC swap transactions between dealers and large market participants that are accepted by a clearinghouse.
Non-cleared swaps must be reported, with major participants and dealers adhering to strengthened capital and margin requirements. The bill exempts commercial end users who use derivatives markets to hedge their price risk from the clearing requirement.

The bill also contains provisions from H.R. 977, including the strengthening of position limits on futures contracts for physically deliverable and OTC commodities as a way to prevent potential price distortions caused by excessive speculative trading.

More information about the legislation, including final bill text and adopted amendments.

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