Treasury Secretary Timothy Geithner testified to the Committee on Financial Services of the House of Representatives on March 26 outlining proposals to regulate credit default swaps and OTC derivatives. The proposed oversight would include:
- treating all OTC derivatives dealers as “systemically important firms” subject to strong regulation and supervision;
- clearing all standardized OTC derivatives contracts through designated central counterparties which are themselves subject to comprehensive regulation and supervision;
- imposing robust standards on the trading of non-standardized OTC derivatives, including trade reporting, documentation, netting, collateral, margin and close-out practices;
- making aggregate trading volume and position data available to the market and individual trade and position data available to regulators on a confidential basis; and
- increasing eligibility and record keeping requirements and imposing a heightened standard of care on all OTC derivative market participants.
The proposal also calls for greater use of exchange traded instruments rather than OTC derivatives.