Wholesale Market Brokers' Association Americas Chairman Stephen Merkel to Appear Before U.S. Senate Subcommittee to Discuss the Emergence of Swap Execution Facilities Under the Dodd-Frank Act

WASHINGTON, June 29, 2011 /PRNewswire/ -- The Wholesale Market Brokers' Association Americas (WMBAA) announced that its Chairman Stephen Merkel, Executive Vice President and General Counsel of BGC Partners, Inc., will appear before the U.S. Senate Subcommittee on Securities, Insurance and Investment today, June 29, to discuss the emergence of swap execution facilities ("SEFs") under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The WMBAA is an independent industry body representing the largest inter-dealer brokers in the Northern American Wholesale Markets across a broad range of financial products. WMBAA member firms account for over 90% of intermediated swaps transactions taking place around the world today.

In his written testimony submitted on behalf of the WMBAA, Mr. Merkel said, "WMBAA member firms are fully functional as market intermediaries in the OTC derivatives markets and will be ready to initiate SEF operations on day one. Wholesale brokers are today's central marketplaces in the global swaps markets and, as such, can serve as a prototype for prospective independent and competitive SEFs. Wholesale brokers are experts in fostering liquidity and transparency in global swaps markets by utilizing trade execution methodologies that feature a hybrid blend of knowledgeable and qualified brokers, as well as sophisticated electronic technology. It is critical that regulators gain a thorough understanding of the many modes of swaps trade execution currently deployed by wholesale brokers and accommodate those methods and practices in their SEF rulemaking."

Mr. Merkel stressed that the final regulations enacted by the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) must be consistent with the plain language of Dodd-Frank and allow for multi-modes of execution as Congress intended. SEFs must not be restricted from deploying the many varied and beneficial trade execution methodologies and technologies successfully used today to execute swaps transactions. The WMBAA also called on the CFTC and SEC to harmonize their regulation and ensure consistency in international regulation, to phase-in new regulations appropriately to prevent unnecessary disruption to the markets, and to support the formation of a common regulatory organization ("CRO") for SEFs to implement and facilitate compliance with the Commissions' rules. The CRO would ensure that a single, consistent standard is applied across multiple SEFs and prevent a "race to the bottom" for rule compliance and enforcement programs.

Mr. Merkel said, "We appreciate the Commissions' recognition of the deliberation and thought necessary to get these rules right, and are generally supportive of the phase-in approach being pursued. Rushing the rule making process and getting things wrong will negatively impact market liquidity in the US swaps markets, disturbing businesses' ability to hedge commercial risk, to appropriately plan for the future and, ultimately, stifle economic growth and job creation. Taking adequate time to get the Title VII regulations right will expedite the implementation of the worthy goals of Dodd-Frank: central counterparty clearing and effective trade execution by regulated intermediaries in order to provide end users with more competitive pricing, increased transparency and deeper trading liquidity for their risk management needs.

"With Congress' help, and the input and support of the swaps industry, regulators can continue their dedicated efforts at well-crafted rule making. If we are successful, our U.S. financial system, including the U.S. swaps markets, can once again be the well ordered marketplace where the world comes to trade."

A live webcast of Mr. Merkel's testimony is available on the Senate Subcommittee's website at http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=6d382a10-f899-49d7-8040-fae575cfc140

About the WMBAA

The WMBAA is an independent industry body representing the largest wholesale and Interdealer Brokers ("IDBs") operating in the North American wholesale markets across a broad range of financial products. IDBs serve as intermediaries for banks and other financial institutions that facilitate access to a full range of OTC and exchange-traded products and their associated derivatives. IDBs are registered broker/dealers for securities activities and are regulated by numerous agencies, including the SEC, the Federal Reserve and, for relevant markets, the CFTC.

SOURCE Wholesale Market Brokers' Association Americas (WMBAA)