This was one of the few Dodd-Frank hearings to date that concentrated on the feasibility of a particular regulation- the mandate to create new swap-execution facilities (SEF) to bring derivatives trading into the sunlight. The Senate Banking Securities Subcommittee looked at the joint rulemaking efforts of the Commodity Futures Trading Commission and the Securities and Exchange Commission. The two agencies have different rules on the issue, with the SEC being more industry friendly. Both Chairman Jack Reed and Ranking GOP member Mike Crapo stressed the need for a greater degree of uniformity in the regulations separately proposed by each agency.
Two panels of traders uniformly endorsed the need for SEFs, but testified the rules as proposed would cause business problems and generate expenses to their clients. They particularly cited problems on conducting block trades and a requirement for multiple quotes on trades. Each witness agreed that the two agencies do a better job of reconciling differences before final regulations are issued.
