Lucas and Atkins agree: Margin and capital requirements should reflect actual risk

Washington, DC – Today, the House Financial Services Committee held a hearing entitled, “Oversight of the Securities and Exchange Commission” with SEC Chairman Paul Atkins. Congressman Frank D. Lucas and Chairman Atkins agreed that the margin and capital requirement should reflect actual risk in order to reduce costs and make clearing more efficient. SELECTED REMARKS: Lucas: “Under your leadership, the SEC has approved two more clearing agencies to offer Treasury clearing. This is a welcome development and certainly a positive step as we move toward full implementation of the Treasury clearing rule… I was also pleased to see the SEC requested comments on a proposed change to extend an existing cross-margining agreement to end users in order to reduce costs and make clearing more efficient. Can we expect a resolution to the proposal well before the clearing rule is live? Market participants will need sufficient runway to execute on these changes” Atkins: “Amen. We want to make sure things go smoothly, that there are no hiccups, and that people have plenty of notice and ability to gear up for those changes.” Lucas: “I know it almost goes without saying, but I hope you’ll also work closely with the banking regulators to ensure capital rules recognize the risk-reducing benefits of netting across products.” Atkins: “Yeah that’s important for the market itself and to be efficient with capital.”

You can watch the full Q&A by clicking here or on the image above.  BACKGROUND: As Chair of the Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity, Congressman Lucas has previously asked about the importance for the SEC to provide clarity regarding its clearing rule. Congressman Lucas also led a letter urging the SEC to extend the compliance deadlines for the Treasury Clearing Rule shortly before it enacted this new policy.