The House Monday overwhelmingly passed two bills that would exempt commercial end-users from margin requirements and ease regulations for affiliate transactions.
The twin pieces of legislation would prohibit regulators from requiring exempt manufacturers and commercial swap users to pay margins (HR 2682) and would exempt inter-affiliate swaps transactions from certain Dodd-Frank requirements (HR 2779). The first bill on margins cleared the Senate by 370 to 24, while the second was adopted by 357 to 36.
“We were encouraged by the House votes. But it doesn’t solve the whole thing,” said John Shelk, president of the Electric Power Supply Association. “While we greatly appreciate [the House] action and commend the sponsors of the legislation…there are several moving pieces necessary to prevent the CFTC [Commodity Futures Trading Commission] and other regulators from over-reaching. EPSA also strongly urges Congress to act on Rep. [Randy] Hultgren’s [R-IL] bill, HR 3527, which clarifies how regulators should and should not define ‘swap dealers’ and other key terms that if left unaddressed could still make energy risk management more difficult and most costly,” he said.
“We don’t want to leave any opening in the [Dodd-Frank] law for the CFTC to drag us into this mess,” Shelk said.
He believes the bipartisan vote in the House was a major win for energy. “EPSA and our allies in a broad coalition of energy end-users of risk management products subject to CFTC regulation applaud the overwhelming majorities of each party that came together [Monday] to adopt these companion pieces of legislation,” Shelk said.
The Senate has yet to take up a comparable measure. “The eyes are now on the Senate,” he said.
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