WASHINGTON — Two key regulators urged Congress on Tuesday to go beyond an Obama administration proposal and impose comprehensive oversight on the sprawling, complex market for financial derivatives blamed for worsening the credit crisis last fall.
The administration is seeking to increase the transparency of the $600 trillion global derivatives market and has proposed that big investment banks that trade derivatives be subject to requirements for holding capital reserves against risk.
Also, a new network of clearinghouses would provide transparency for trades in credit default swaps and other derivatives.
The House Agriculture and Financial Services committees have agreed on guidelines for a measure similar to the administration’s proposal. But Commodity Futures Trading Commission Chairman Gary Gensler has urged lawmakers to tighten the legislation in several areas, including eliminating exemptions from new requirements for foreign-currency swaps and small firms dealing in derivatives.
Gensler says excluding foreign- currency swaps could enable dealers to structure other swaps transactions in a way to skirt regulation.
“The law must cover the entire marketplace, without exception,” he told the House Agriculture Committee Tuesday.
Securities and Exchange Commission Chairman Mary Schapiro agreed and said the Treasury Department’s proposal “should be strengthened in several ways to further avoid regulatory gaps.”
