Swap Entities Regulation - Comment Letter - BlackRock - April 29, 2011

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Dodd-Frank Timeline, Clearing Agency Standards for Operation and Governance, SEC
Proposal Date Final Rule Issue Effective Date Reopened Comment Period Deadline
March 16, 2011 November 2, 2012 January 2, 2013 July 22, 2013
Dodd-Frank Timeline, Ownership Limitations and Governance Requirements for SBS Entities, SEC
Proposal Date Comment Deadline Reopened Comment Period Deadline
October 26, 2010 April 29, 2011 July 22, 2013

Clearing Agency Standards for Operation and Governance
April 29, 2011

According to the comment letter, BlackRock:

  • supports the standards set for all clearing agencies in Proposed Rule 17Ad-22, particularly the $50-million net capital requirement;
  • suggests that the SEC take caution in considering applications by firm to abide by a higher net capital requirement;
  • recommends that the SEC monitor security-based swap clearing agency operating committees and guarantee that buy-side market participants have an appropriate and meaningful role on these committees;
  • believes that the SEC should require security-based swap clearing agencies to publish pricing and valuation information to the public and to its clearing members simultaneously; and
  • advises the SEC to review the costs imposed by Proposed Rule 17Aj-1 concerning the dissemination of pricing and valuation information by security-based swap clearing agencies.

Ownership Limitations and Governance Requirements for Security-Based Swap Clearing Agencies, Security-Based Swap Execution Facilities, and National Securities Exchanges With Respect to Security-Based Swaps Under Regulation MC
April 29, 2011

From the comment letter:

  • "The buy-side must have a meaningful voice in SB swap clearing agency operations."
  • "Strong conflict of interest rules should prevent any one group of market participants from dominating the risk committee of a SB swap clearing agency."

BlackRock suggests that in order to accomplish the latter suggestion, the Commission should include customer representatives and independent directors in governance organizations, but also enforce certain mechanisms to guarantee that dealer clearing members do not take advantage of their situation on risk and governance committees and silence these other included members.


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