The House Financial Services Committee last Wednesday voted out three bills that clarify and polish up parts of Title VII of the Dodd-Frank Wall Street Reform Act, but make no substantive changes.

By voice vote the panel approved HR 2586, “The Swap Execution Facility Clarification Act,” which “sends a clear message” that the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) should harmonize their rules governing swap execution facilities (SEF). Also clearing the committee was a bill (HR 2682) that would bar regulators from imposing margin requirements on nonfinancial end-users under the derivatives title of Dodd-Frank.

Democrats and Republicans on the House committee voted out HR 2779, which would exempt interaffiliate swaps from certain requirements under Dodd-Frank, specifically clearing, execution and margin requirements.

A proposed amendment to HR 2586 seeking to impose a three-month deadline on the CFTC and the SEC to complete their tasks under Dodd-Frank was shot down, with the vote split along party lines (23-31).

Democrats and Republicans alike were critical of the CFTC’s proposed rule for SEFs, which were created under Dodd-Frank for the sole purpose of trading swaps. “The CFTC has proposed a very narrow, one-size-fits-all, cookie-cutter approach [for SEFs] that limits trade only to electronic platforms. It prohibits the use of voice brokers…and is more appropriate for a futures market,” said Rep. Carolyn Maloney (D-NY).

By comparison, the SEC has developed a more flexible rule that allows SEFs to operate many types of systems, she said. The two agencies “need to harmonize their proposals so that we have one set of rules” for SEF platforms, according to Maloney.

HR 2586 “would prevent the CFTC and the SEC from interpreting the SEF definition in materially different ways,” said Rep. Scott Garrett (R-NJ), co-author of the bill.

Both the CFTC and the SEC were given the same statutory direction, but only the SEC has developed a rule that “is more in line with Dodd-Frank,” Maloney said.

Rep. Maxine Waters, the second highest ranking Democrat on the panel, said she was “very concerned” about the SEF measure, saying it ultimately could make everything nontransparent.”

However, “I think this issue is best left to the CFTC and SEC to decide” in a rulemaking proceeding, she said, adding that a “legislative fix [was] unnecessary,” she said.

As next in line to succeed Rep. Barney Frank (D-MA) as ranking member on the panel, Waters warned that she “will constantly be challenging any attempts to change, modify or to take in another direction the work of Dodd-Frank.” Frank announced last week that he will not seek reelection to Congress in 2012 (see related story).

“On the merits, your amendment [setting a three-month deadline] would do more harm than good,” Garrett told Waters. Maloney, however, said she supported Waters’ amendment, saying it sends a signal for the regulators to come together on their rules.

But Garrett said a three-month deadline would be moot because it would take more than that for the bill to pass through the House Agriculture Committee (which also has jurisdiction), the Senate Agriculture Committee, both houses of Congress and be forwarded to President Obama, who has vowed to veto it.

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