Corporate Governance

Dodd-Frank and Derivative Transparency

By Tamar Weinrib

The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted to prevent the occurrence of the recently suffered financial crisis.  To achieve its goal it has empowered agencies such as the Securities Exchange Commission to set forth regulations designed, among other things, to increase oversight of derivatives called security based swaps.  To that end, on October 13, 2010 the SEC adopted a regulation which requires parties to report security-based swap information to the SEC or to a registered security-based swap data repository. Parties also are required to preserve data pertaining to the terms of pre-enactment security-based swaps in support of the reporting requirements. 

The SEC is also currently considering the proposed regulations to avoid conflicts of interest.  Those proposed regulations include: restricting a clearinghouse member from holding a 20 percent stake in the clearinghouse; restricting clearinghouse members from holding more than 40 percent in a clearinghouse with other members; and requiring a third of the clearinghouse's board of directors to be independent.

Full post as published by PomTalk on October 20, 2010 (boomark / email).