Garrett Applauds Passage of Swaps Bill by Agriculture Committee

WASHINGTON, DC – Rep. Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, applauded passage of H.R. 2586, the Swap Execution Facility Clarification Act, by the House Agriculture Committee today with wide bipartisan support.  Introduced by Garrett in July and then passed by the Financial Services Committee in November, H.R. 2586 requires the Commodities Future Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to finalize swap execution facilities (SEFs) rules that allow the swaps market to naturally evolve towards the best form of execution over time.    

“I was pleased to see this important bill pass through the House Agriculture Committee today, paving the way for consideration by the full House in the coming weeks” said Garrett after the vote.  “The fact that this bill received such wide bipartisan support, both in the Agriculture Committee and the Financial Services Committee, underscores that this legislation is necessary to rein in overzealous regulators.  With the national unemployment rate locked in above 8%, the last thing we should be doing is intentionally shooting ourselves in the foot.”

Background

Regulating the execution of swap transactions in the U.S., as mandated by the Dodd-Frank Act, is the most significant market structure undertaking since 1934, and if we don’t get it right, then we risk putting the U.S. at a competitive disadvantage with our foreign counterparts.  While for some the goal is to have them trade with continuous pricing like the equity and futures markets, because many swaps are illiquid products with sporadic pricing, that goal simply isn’t practicable at this time.  H.R. 2586 is specifically designed to promote the transparent evolution of swaps trading on SEFs and help to ensure that a vibrant swap market develops in the U.S.  Importantly, it also protects the confidential trading strategies of asset managers, pension funds, insurance companies, farm credit banks and the ability of commercial end-users to access the swap market to fund the long-term projects necessary to create jobs.   

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