81–429 

113TH CONGRESS REPT. 113–106 " ! HOUSE OF REPRESENTATIVES 1st Session Part 2 

SWAP DATA REPOSITORY AND CLEARINGHOUSE 

INDEMNIFICATION CORRECTION ACT OF 2013 

JUNE 12, 2013.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 742] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 742) to amend the Securities Exchange Act of 1934 and 

the Commodity Exchange Act to repeal the indemnification requirements for regulatory authorities to obtain access to swap data required to be provided by swaps entities under such Acts, having 

considered the same, report favorably thereon without amendment 

and recommend that the bill do pass. 

PURPOSE AND SUMMARY

H.R. 742, the ‘‘Swap Data Repository and Clearinghouse Indemnification Correction Act of 2012,’’ would repeal the indemnification 

provisions in Sections 725, 728, and 763 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act (the ‘‘Dodd-Frank 

Act’’) (Pub. L. No. 111–203) to increase market transparency, facilitate global regulatory cooperation, and ensure that U.S. regulators 

have access to necessary swaps data from foreign data repositories, 

derivatives clearing organizations, and regulators. 

BACKGROUND AND NEED FOR LEGISLATION

Sections 728 and 763 of the Dodd-Frank Act require swap data 

repositories and security-based swap data repositories to make 

data available to non-U.S. financial regulators, including foreign financial supervisors, foreign central banks, and foreign ministries. 

Before a U.S. data repository can share data with a foreign regulator, however, the foreign regulator must agree that it will abide 


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by applicable confidentiality requirements that it will indemnify 

the data repository and the Securities and Exchange Commission 

(SEC) or the Commodity Futures Trading Commission (CFTC) for 

litigation expenses that may result from the sharing of data with 

the foreign regulator. Section 725 of the Dodd-Frank Act imposes 

similar requirements for data sharing between derivatives clearing 

organizations and foreign regulators, including the requirement 

that foreign regulators indemnify derivatives clearing organizations 

and U.S. regulators for litigation expenses that may result from the 

sharing of data with foreign regulators. 

These indemnification provisions threaten to make data sharing 

arrangements with foreign regulators unworkable. Foreign regulators will most likely refuse to indemnify data repositories, derivatives clearing organizations, or their U.S. regulators for litigation 

expenses in exchange for access to data. As a result, foreign regulators may establish their own data repositories and clearing organizations to ensure they have access to data they need to perform 

their supervisory duties, which would result in the creation of multiple databases, needlessly duplicative data collection efforts, and 

the possibility of inconsistent or incomplete data being collected 

and maintained across multiple jurisdictions. Moreover, the indemnification provisions in Sections 725, 728, and 763 of the DoddFrank Act have prompted foreign regulators to consider adopting 

similar indemnification requirements, which would prevent U.S. 

regulators from obtaining data from foreign data repositories and 

derivatives clearing organizations. 

Market participants and regulators have expressed concerns 

about these indemnification provisions. For example, in an April 

11, 2013 hearing of the Capital Markets and Government Sponsored Enterprises Subcommittee hearing, Christopher Childs, Managing Director and Chief Executive Officer, DTCC Data Repository 

(U.S.), stated that, ‘‘The continued presence of the indemnification 

requirement is a significant barrier to the ability of regulators globally to effectively utilize the transparency offered by a trade repository registered in the U.S.’’ 

In testimony before the Subcommittee on February 8, 2012, 

Larry Thompson, DTCC’s General Counsel, testified that ‘‘[m]any 

regulators worldwide have expressed deep concerns about the reach 

and scope of the indemnity provision and have stated it creates an 

environment for data fragmentation.’’ Mr. Thompson noted that 

such provisions will ‘‘(1) impede global regulatory cooperation, (2) 

risk fragmentation of a global data set for OTC derivatives, and (3) 

undermine efforts to increase market transparency and mitigate 

risk in this market.’’ Carlos Tavares, Vice Chairman of the European Securities and Markets Authority, expressed similar concerns 

in a January 17, 2012, letter to then-SEC Chairman Mary 

Schapiro, writing that ‘‘indemnification agreements undermine the 

key principle of trust . . . essential for exchanging information 

among regulators.’’ 

On February 1, 2012, the CFTC and SEC staffs issued a ‘‘Joint 

Report on International Swap Regulation,’’ which acknowledged 

these problems with the indemnification provisions in Sections 728 

and 763 of the Dodd-Frank Act. The Commissions’ staff reported 

that the indemnification provisions have ‘‘caused concern among 

foreign regulators, some of which have expressed unwillingness to 


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register or recognize [a swaps data repository] unless able to have 

direct access to necessary information.’’ The staff reported that foreign regulators ‘‘are considering the imposition of a similar requirement that would restrict the CFTC’s and SEC’s access to information at [data repositories] abroad.’’ The staff noted that even 

though the CFTC and SEC are working to provide access to foreign 

regulators consistent with the Dodd-Frank Act and to ensure that 

U.S. regulators have access to foreign-based information, ‘‘Congress 

may determine that a legislative amendment to the indemnification 

provision is appropriate.’’ 

During a March 21, 2012 hearing on identical legislation introduced in the 112th Congress, the Subcommittee on Capital Markets and Government Sponsored Enterprises received testimony 

from Ethiopis Tafara, the former Director of the SEC’s Office of 

International Affairs, who acknowledged the problems associated 

with the indemnification provisions in the Dodd-Frank Act and the 

need for a legislative fix. Mr. Tafara stated that ‘‘[t]he requirement 

presents a barrier to U.S. and foreign governmental entities’ ability 

to obtain data from a security-based swap data repository, in particular because U.S. and most other foreign governmental entities 

lack the legal authority to enter into the necessary indemnification 

agreement required by Section 763(i).’’ 

Mr. Tafara further testified that the SEC is ‘‘concerned that 

there is a potential danger to our regulatory framework if foreign 

regulators are unable to access data held by SEC-registered security-based swap data repositories.’’ Mr. Tafara concluded that the 

‘‘SEC recommends that Congress consider removing the indemnification requirement added by the Dodd-Frank Act,‘‘ which 

’’would assist the SEC, as well as other U.S. regulators, in securing 

the access it needs to data held in global trade repositories.’’ 

HEARINGS

The Committee on Financial Services’ Subcommittee on Capital 

Markets and Government Sponsored Enterprises held a hearing on 

H.R. 742 on April 11, 2013. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

May 7, 2013, and ordered H.R. 742 to be reported favorably to the 

House without amendment by a recorded vote of 52 yeas to 0 nays 

(Record vote no. FC–9), a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole vote in committee was a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed 

to by a recorded vote of 52 yeas to 0 nays (Record vote no. FC–9), 

a quorum being present. 


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RECORD VOTE NO. FC–9 

Representative Yea Nay Present Representative Yea Nay Present 

Mr. Hensarling ...................... X ........... ............. Ms. Waters ........................... X ........... .............

Mr. Gary G. Miller (CA) ......... X ........... ............. Mrs. Maloney (NY) ................ X ........... .............

Mr. Bachus ........................... X ........... ............. Ms. Vela ́zquez ...................... X ........... .............

Mr. King (NY) ........................ X ........... ............. Mr. Watt ............................... X ........... .............

Mr. Royce .............................. X ........... ............. Mr. Sherman ........................ X ........... .............

Mr. Lucas .............................. X ........... ............. Mr. Meeks ............................. X ........... .............

Mrs. Capito ........................... X ........... ............. Mr. Capuano ........................ X ........... .............

Mr. Garrett ............................ X ........... ............. Mr. Hinojosa ......................... X ........... .............

Mr. Neugebauer .................... X ........... ............. Mr. Clay ................................ X ........... .............

Mr. McHenry .......................... X ........... ............. Mrs. McCarthy (NY) .............. X ........... .............

Mr. Campbell ........................ X ........... ............. Mr. Lynch ............................. X ........... .............

Mrs. Bachmann .................... ........... ........... ............. Mr. David Scott (GA) ............ X ........... .............

Mr. McCarthy (CA) ................ X ........... ............. Mr. Al Green (TX) ................. X ........... .............

Mr. Pearce ............................. X ........... ............. Mr. Cleaver ........................... ........... ........... .............

Mr. Posey .............................. X ........... ............. Ms. Moore ............................. X ........... .............

Mr. Fitzpatrick ....................... ........... ........... ............. Mr. Ellison ............................ X ........... .............

Mr. Westmoreland ................. ........... ........... ............. Mr. Perlmutter ...................... X ........... .............

Mr. Luetkemeyer .................... X ........... ............. Mr. Himes ............................. X ........... .............

Mr. Huizenga (MI) ................. X ........... ............. Mr. Peters (MI) ..................... X ........... .............

Mr. Duffy ............................... X ........... ............. Mr. Carney ............................ X ........... .............

Mr. Hurt ................................ X ........... ............. Ms. Sewell (AL) .................... ........... ........... .............

Mr. Grimm ............................. X ........... ............. Mr. Foster ............................. X ........... .............

Mr. Stivers ............................ X ........... ............. Mr. Kildee ............................. ........... ........... .............

Mr. Fincher ............................ X ........... ............. Mr. Murphy (FL) ................... ........... ........... .............

Mr. Stutzman ........................ X ........... ............. Mr. Delaney .......................... X ........... .............

Mr. Mulvaney ........................ X ........... ............. Ms. Sinema .......................... X ........... .............

Mr. Hultgren .......................... X ........... ............. Mrs. Beatty ........................... ........... ........... .............

Mr. Ross ................................ X ........... ............. Mr. Heck (WA) ...................... X ........... .............

Mr. Pittenger ......................... ........... ........... .............

Mrs. Wagner .......................... X ........... .............

Mr. Barr ................................ X ........... .............

Mr. Cotton ............................. X ........... .............

Mr. Rothfus ........................... X ........... .............

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 742 will repeal 

prerequisites that a swap data repository or derivatives clearing organization agree to indemnify the SEC or CFTC, as the case may 

be, before they may share information with specified regulatory entities. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 


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COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, May 17, 2013. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 742, the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

H.R. 742—Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013 

Under current law, derivatives clearing organizations (DCOs) 

and swap data repositories (SDRs) must report information about 

swap transactions to the Commodity Futures Trading Commission 

(CFTC), or in the case of SDRs that receive information about securities-based swaps, to the Securities and Exchange Commission 

(SEC). (A swap is a contract that calls for an exchange of cash between two participants, based on an underlying rate or index or the 

performance of an asset.) Such information also must be shared 

with other regulatory agencies, both foreign and domestic, if those 

agencies request the information and agree to certain conditions. 

H.R. 742 would eliminate one of those conditions—that agencies 

requesting the information indemnify the SDRs and the CFTC (or 

the SEC for security-based swap information) for expenses that 

arise from litigation related to the shared information. The bill 

would still require the regulatory agencies requesting the information to agree to certain confidentiality requirements prior to receiving the data. 

Based on information from the CFTC and the SEC, CBO expects 

that implementing the provisions of H.R. 742 would not require a 

significant increase in their workloads because neither agency expects to revise rules already in place. Therefore, CBO estimates 

that any change in discretionary spending to implement the legislation would be insignificant. Further, under current law, the SEC 

is authorized to collect fees sufficient to offset the cost of its annual 

appropriation each year; therefore, we estimate that the net cost to 


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the agency would be negligible, assuming annual appropriation actions consistent with that authority. 

Based on information from several federal financial regulators, 

CBO estimates that enacting H.R. 742 would have an insignificant 

effect on direct spending and revenues; therefore, pay-as-you-go 

procedures apply. Under current law, any litigation expenses of the 

federal government related to sharing information about swap 

transactions, in certain instances, would be paid by foreign regulators. Under the bill, such expenses would become a federal liability. Because the regulations have only been finalized within the 

past year and any potential litigation is unlikely to be resolved 

quickly, CBO expects those costs would not arise in the next 10 

years. 

H.R. 742 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

On April 11, 2013, CBO transmitted a cost estimate for H.R. 742, 

the Swap Data Repository and Clearinghouse Indemnification Correction Act of 2013, as ordered reported by the House Committee 

on Agriculture on March 20, 2013. Both versions of the bill are 

identical, and the CBO cost estimates are the same. 

The CBO staff contact for this estimate is Susan Willie. The estimate was approved by Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 742 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), the 

Committee states that no provision of H.R. 742 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included in 

any report from the Government Accountability Office to Congress 

pursuant to section 21 of Public Law 111–139, or a program related 


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to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), the 

Committee states that H.R. 742 does not require any directed 

rulemakings. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section cites H.R. 742 as the ‘‘Swap Data Repository and 

Clearinghouse Indemnification Correction Act of 2013.’’ 

Section 2. Repeal of indemnification requirements 

This section repeals the indemnification provisions in Sections 

725, 728, and 763 of the Dodd-Frank Act. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

COMMODITY EXCHANGE ACT 

* * * * * * * 

SEC. 5b. DERIVATIVES CLEARING ORGANIZATIONS. 

(a) * * * 

* * * * * * * 

(k) REPORTING REQUIREMENTS.— 

(1) * * * 

* * * * * * * 

ø(5) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.— 

Before the Commission may share information with any entity 

described in paragraph (4)— 

ø(A) the Commission shall receive a written agreement 

from each entity stating that the entity shall abide by the 

confidentiality requirements described in section 8 relating 

to the information on swap transactions that is provided; 

and 

ø(B) each entity shall agree to indemnify the Commission for any expenses arising from litigation relating to the 

information provided under section 8.¿ 

(5) CONFIDENTIALITY AGREEMENT.—Before the Commission 

may share information with any entity described in paragraph 

(4), the Commission shall receive a written agreement from each 

entity stating that the entity shall abide by the confidentiality 

requirements described in section 8 relating to the information 

on swap transactions that is provided. 

* * * * * * * 


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SEC. 21. SWAP DATA REPOSITORIES. 

(a) * * * 

* * * * * * * 

ø(d) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.—Before the swap data repository may share information with any entity described in subsection (c)(7)— 

ø(1) the swap data repository shall receive a written agreement from each entity stating that the entity shall abide by 

the confidentiality requirements described in section 8 relating 

to the information on swap transactions that is provided; and 

ø(2) each entity shall agree to indemnify the swap data repository and the Commission for any expenses arising from litigation relating to the information provided under section 8.¿ 

(d) CONFIDENTIALITY AGREEMENT.—Before the swap data repository may share information with any entity described in subsection 

(c)(7), the swap data repository shall receive a written agreement 

from each entity stating that the entity shall abide by the confidentiality requirements described in section 8 relating to the information on swap transactions that is provided. 

* * * * * * * 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

PERIODICAL AND OTHER REPORTS

SEC. 13. (a) * * * 

* * * * * * * 

(n) SECURITY-BASED SWAP DATA REPOSITORIES.— (1) * * * 

* * * * * * * 

(5) DUTIES.—A security-based swap data repository shall— 

(A) * * * 

* * * * * * * 

ø(H) CONFIDENTIALITY AND INDEMNIFICATION AGREEMENT.—Before the security-based swap data repository 

may share information with any entity described in subparagraph (G)— 

ø(i) the security-based swap data repository shall receive a written agreement from each entity stating 

that the entity shall abide by the confidentiality requirements described in section 24 relating to the information on security-based swap transactions that is 

provided; and 

ø(ii) each entity shall agree to indemnify the security-based swap data repository and the Commission 

for any expenses arising from litigation relating to the 

information provided under section 24.¿ 

(H) CONFIDENTIALITY AGREEMENT.—Before the securitybased swap data repository may share information with 


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any entity described in subparagraph (G), the securitybased swap data repository shall receive a written agreement from each entity stating that the entity shall abide by 

the confidentiality requirements described in section 24 relating to the information on security-based swap transactions that is provided. 

* * * * * * * 

Æ 


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