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On April 8, ISDA CEO Scott O’Malia testified on the implementation of mandatory US Treasury clearing before the US House of Representatives Committee on Financial Services Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity.
“The US Treasury market is systemically important and underpins the smooth functioning of markets globally, including adjacent derivatives markets. It is therefore critical that we look carefully at rules from the SEC, CFTC and prudential regulators to ensure they support – rather than impair – US Treasury market liquidity and resiliency,” he said in his written testimony.
“Unless changes are made, bank balance sheet capacity will come under strain, threatening the ability of banks to absorb the massive supply of new Treasury issuance and facilitate client clearing. Disruption in the U.S. Treasury repo market could also impair the exchange of collateral for cleared and non-cleared derivatives.”
Details of the hearing are available here.
Click on the PDF to read the full testimony.
