I want to join the Chairman in thanking all of the staff for the hard work that went into this release. In particular I would like to thank Carol McGee, Andrew Bernstein, Burt Porter, Claire O'Sullivan, and Hari Phatak.
I am happy to see that we are finally moving forward with a proposal for the security-based swaps risk mitigation rule that Congress directed us to promulgate eight years ago. Today's proposed rule would help reduce the risks posed by security-based swaps in several ways.
First, it would ensure that counterparties agree on, and document, the terms of security-based swaps. This will reduce legal uncertainty during credit events. Second, the proposed rule would help ensure that counterparties regularly resolve valuation discrepancies so that there are no surprises. Third, the rule would enhance netting of security-based swaps. This would make it easier for counterparties and the government to understand where risk actually resides, and would reduce the chances for processing errors or other problems that result from offsetting and redundant security-based swaps. Lastly, the proposed rule would help ensure that counterparties document their trading relationships, i.e., their rights and obligations, prior to the execution of a swap. This will help reduce counterparty risk.
I commend the Chairman for proposing rules in this area.
Thank you.