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FEDERALhearing transcript

Hearing on Financial Rules for Businesses Using Derivatives

Original title: HEARING TO REVIEW THE IMPACT OF CAPITAL AND MARGIN REQUIREMENTS ON END-USERS

January 1, 2016

Dodd-Frank Actfinancial regulationderivativescapital requirementsmargin requirementsagriculturerisk management

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The Frame

What this does

This hearing evaluates whether current federal financial regulations are making it too expensive for non-financial businesses to use to hedge against risks like fluctuating commodity prices or interest rates.

Who is mentioned in the record

Potentially affected actors named in the source documents. Mention is not a position.

Agricultural producers

These businesses use derivatives to manage commodity price risks and are subject to the regulatory environment governing these financial tools.

Financial institutions

Banks and swap dealers must comply with capital and margin requirements set by federal regulators.

What changed

Last recorded activity January 1, 2016.

What's next

Next step not available in the current record.

Summary

The House Subcommittee on Commodity Exchanges, Energy, and Credit held a hearing to examine how post-financial crisis regulations, specifically capital and , affect businesses that use to manage risk. The discussion focused on whether these rules, intended to stabilize the financial system, have created unintended burdens for non-financial companies like manufacturers and agricultural producers.

Why It Matters

This hearing evaluates whether current federal financial regulations are making it too expensive for non-financial businesses to use to hedge against risks like fluctuating commodity prices or interest rates.

Key Facts

  • The hearing was the second in a series examining the implementation of the Dodd-Frank Act over the past five years.
  • The subcommittee focused on capital standards and margin requirements for banks, non-bank swap dealers, and other market participants.
  • Derivatives are used by producers, manufacturers, merchants, pensions, and insurers to manage commodity, foreign exchange, interest rate, and credit risks.
  • The hearing took place on April 28, 2016, in the Longworth House Office Building.
  • The subcommittee is part of the House Committee on Agriculture.

Frequently Asked Questions

What are derivatives?
Financial contracts that derive their value from an underlying asset, used by businesses to manage risks like price changes in commodities or interest rates.
What are capital and margin requirements?
Rules that require financial institutions to hold a certain amount of cash or liquid assets to cover potential losses, which can increase the cost of trading .
Who are 'end-users' in this context?
Businesses, such as farmers, manufacturers, and pension funds, that use to hedge against business risks rather than for speculative trading.

News Coverage

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Sponsors

Discoveries

Patterns POLISCOPE noticed across the record. These are observations to investigate, not conclusions.

policy shift90% confidence

Regulatory Review Cycle

The hearing demonstrates a multi-year oversight effort by the House Agriculture Committee to review the long-term impacts of the Dodd-Frank Act.

Dodd-Frank ActCommittee on Agriculture

Connected Entities

personThomas C. Deas, Jr.“Representative for the Center for Capital Markets Competitiveness and the Coalit”Map →
personTyler Gellasch“Founder of Myrtle Makena, LLC”Map →
personAustin Scott“Chairman of the Subcommittee on Commodity Exchanges, Energy, and Credit”Map →
otherDodd-Frank Act“The federal law governing financial regulation that is the subject of the hearin”Map →
personWalter L. Lukken“President and CEO of the Futures Industry Association”Map →
personScott D. O'Malia“CEO of the International Swaps and Derivatives Association, Inc.”Map →

Sources

Open source document

www.govinfo.gov

Analysis Score

0–100
  • Significance60
    How much this matters to a regular citizen
  • Controversy40
    Intensity of disagreement among stakeholders
  • Entertainment10
    Compellingness for a non-policy-wonk reader
  • Buzz15
    Current news / social attention level

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