Opening Statements

Remarks as prepared:

Good Morning. I want to start today by thanking you for joining the Commodity Exchanges, Energy, and Credit Subcommittee for our first meeting of 2016.

As many of you may remember, the full House Committee on Agriculture held a hearing last July on the implementation of Dodd Frank over the five years since it was passed. That hearing highlighted some of the remaining challenges that regulators must still tackle to complete the derivatives market reforms envisioned by world leaders in the aftermath of the 2008 global financial crisis. The purpose of today’s hearing is to dive deeper on one issue in particular- the status of swap data reporting goals- and to better understand what work remains to be completed.
In response to the crisis, a crucial goal of the G20 financial reform commitments was to bring about greater regulatory transparency in the over-the-counter (OTC) derivatives marketplace.

With that focus, the United States imposed broad data collection requirements for OTC derivatives and established Swap Data Repositories (SDR’s) to collect and maintain swap data under the Dodd-Frank Act. The five years since the enactment of Dodd-Frank have seen some significant progress in the reporting of OTC derivatives trades and several clear victories in the quest for market transparency.

However, this progress remains uneven, and major gaps remain in translating that progress in data reporting to meaningful market oversight. Data collection alone is not sufficient to achieve the goal of increased regulatory transparency. Real insight into global systemic risk requires that regulators be able to aggregate data accurately from different SDRs here in the United States and across global jurisdictions.

Market participants have raised serious concerns about the status of regulatory transparency efforts. This Committee has heard testimony about the lack of common data standards and common reporting requirements.

This lack of standardization unfortunately falls at many points on the reporting spectrum, from inconsistency among global regulators on trade reporting requirements to undefined data collection requirements from the CFTC. Even something as simple as a defined way to record a date hasn’t been established. Imagining the variety of possible variations for that one simple data point – do you start with the month or do you start with the year - helps illustrate the larger issue at hand.

I think we all agree that there is little regulatory value in non-standardized, non-aggregable data. The question at hand, then, is how to continue moving the ball forward to achieve needed market transparency. And, importantly, how to do so without forcing artificial standardization and a one-size fits all approach unto a highly customized market, especially in regard to the nonfinancial commodity swaps relied upon by end-users for risk management.

We hope to leave this hearing with a better understanding of the progress made towards meeting the reporting and transparency goals set forth by the G20, as well as market participants’ and the CFTC’s role in that process. In the end, the success or failure of our financial reform efforts cannot be judged by the list of rules finalized by the CFTC. Real reform requires coordination between global regulators to create a coherent system of regulation that fosters market assess and promotes market integrity.

We are fortunate to be joined by a panel of distinguished witnesses who are here to share their views from both the regulatory and market participant perspectives. Thanks to each of you for appearing before us today. We look forward to hearing your perspectives on these issues and appreciate the time and effort you’ve put forward to be here.

With that, I’ll recognize our Ranking Member, Mr. Scott, for any remarks he’d like to make.