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Statement on Adoption of Rule on Reporting and Dissemination of Security-Based Swap Information

Commissioner Kara M. Stein

July 13, 2016

I would like to thank the staff for their hard work in bringing this recommendation to the Commission, including John Roeser, Michael Gaw, Sara Albertson, Yvonne Fraticelli, Kathleen Gross, David Michehl, Geoffrey Pemble, Hari Phatak, Y.C. Loon, Lori Price, Robert Teply, Maureen Johansen, and Mykalia DeLesDernier.

In 2008, we witnessed the consequences of a concentrated and opaque market in security-based swaps. AIG had sold credit default swaps (CDS) covering billions and billions of dollars in assets and was on the brink of catastrophic failure. As AIG neared collapse, the New York Federal Reserve Bank stepped in with an $85 billion emergency loan. The failure of AIG would have shattered confidence in already fragile financial markets.[1]

The opacity of the CDS market contributed to the threat of a daisy chain of failures. No one understood where the risk resided or how concentrated the exposures were. Addressing this need was one of the intentions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).

Today, we are adopting provisions regarding the reporting and public dissemination of security-based swap transactions as mandated by the Dodd-Frank Act. These provisions will result in increased transparency which should allow for a more efficient market, better price discovery, and increased competition. By casting light on this previously opaque market, investors will have better visibility into the pricing and trading of these financial products, and regulators will be able to better regulate and oversee this marketplace.

Among other things, the provisions we are adopting today require security-based swap data repositories to provide transaction data to the public without charge. It also will enable all interested parties to utilize this data without restriction. Further, the changes extend the regulatory reporting and public dissemination requirements to additional cross-border security-based swaps.

While this is another step toward completing the rules for security-based swaps, we have yet to finish the work set for us six years ago by Congress. As the experience of other regulators demonstrates, six years should have been more than enough time for the Commission’s rules to have been completed. The securities-based swap framework mandated by the Dodd-Frank Act is critical to the health of this marketplace, and should help protect both investors and the economy from the abuses that occurred during, and prior to, the financial crisis. I hope to see the staff’s recommendation on the outstanding items in the very near future.

Thank you.

[1] The New York Federal Reserve Bank and the U.S. Department of the Treasury worked with AIG to stabilize the company so that it no longer posed a systemic risk and to ensure repayment of taxpayer assistance. See

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