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September 28, 2016

Limiting Contagion Risk, CFTC Expands Interest Rate Swap Clearing Requirement

FOR IMMEDIATE RELEASE
Wednesday, September 28, 2016
Contact: Nick Jacobs, 202-618-6430, njacobs@bettermarkets.com

Washington, D.C. – Victoria Daka, Attorney and Derivatives Policy Analyst at Better Markets, issued the following statement today on the announcement from the Commodities Futures Trading Commission (CFTC) to expand the clearing requirement for interest rate swaps. 

“Better Markets commends the Commission for its decision today to expand the types of swaps that are subject to mandatory clearing to include additional interest-rate swaps. This final rule is an important step in reducing systemic risk and increasing transparency in the swaps market. Interest rate swaps markets significantly contribute to the interconnectedness of financial market participants because of the markets size and the large exposures of major swap dealer banks that control the markets. As such, losses at one of the major swap dealer banks can easily and quickly spread across the markets and cause serious contagion risk. The rule finalized by the Commission today takes an important step in limiting this serious contagion risk.”

[Better Markets’ Comment Letter to the CFTC on the clearing requirement can be found here.]

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

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