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November 17, 2011

House Financial Services Sub-Committee votes

The story on Bloomberg on the House of Representatives sub-committee vote shows real movement on the impact of regulation. Buried in the details are interesting potential changes:

  • The dropping of the requirement to ‘push out’ your OTC business into an affiliate – a big deal for the banks.
  • Exempting firms from clearing affiliate trades, also a big deal for banks with multiple regional entities, or those who consulate OTC activity into one risk managing entity.
  • Requiring the SEC & CFTC to allow more flexibility on the rules for how a SEF operates, and how participants execute trades, such as the minimum 5 quotes
  • Imposing a requirement on the SEC to perform a cost/benefit analysis during rule making, and potentially apply this analysis to all rules

The votes referred to in the BBG article are those of a committee, and don’t mean anything has actually changed. The outcome of the sub-committee would need to be approved by a floor vote in the House of Representatives, and also on the floor of the Senate, where the Democrats will probably prevent any change occurring.

But the fact the votes got carried, means we may see a stronger push by Republicans to soften the impact of Dodd Frank.


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