|Secretary Geithner speaking in February
Citing the "enormous scale" and "critical role" of over-the-counter (OTC) derivatives in the financial markets, U.S. Treasury Secretary Timothy Geithner
outlined the steps the Obama Administration
intends to take to regulate OTC derivatives in testimony to Congress on July 10
. The steps include: (i) requiring that all standardized derivative contracts be cleared through well-regulated central counterparties and executed either on regulated exchanges or regulated electronic trade execution systems; (ii) encouraging greater use of standardized OTC derivatives through capital requirements and other measures to facilitate migration of such derivatives onto central clearinghouses and exchanges; (iii) requiring all OTC derivative dealers and other major market participants to be subject to supervision and registration; (iv) making OTC derivative markets fully transparent by the imposition of recordkeeping and reporting requirements; (v) providing the Securities and Exchange Commission
(SEC) and the Commodity Futures Trading Commission
(CFTC) with authority to enforce the regulation of OTC derivative markets; (vi) working with the SEC and CFTC to improve standards governing who can participate in OTC derivative markets and (vii) working with international counterparts to ensure that the U.S. regulatory regime is matched by effective regimes internationally. The testimony follows on recent testimony by SEC Chairman Mary Schapiro
on the same subject.