##ositories. the goal of all of these efforts is to develop a consistent international approach to the regulation and supervision of derivatives products and market infrastructures, as well as to the sound implementation of the agreed - upon approaches. our aim is to ensure a level playing field that will promote both financial stability and fair competitive conditions by preventing activity from flowing to less regulated jurisdictions. bis central bankers ’ speeches infrastructure issues the dodd - frank act addressed both the infrastructure of the derivatives markets and the regulation and supervision of its dealers and major participants. central counterparties are given an expanded role in the clearing and settling of swap and security - based swap ( hereafter referred to as “ swap ” ) transactions, and the board believes benefits can flow from this reform. since 2005, federal reserve staff members have worked with market participants to strengthen the infrastructure for otc derivatives, including developing and broadening the use of central clearing mechanisms and trade repositories. market participants have already established central counterparties that provide clearing services for some otc interest rate, energy, and credit derivatives contracts. if properly designed, managed, and overseen, central counterparties offer an important tool for managing counterparty credit risk, and thus they can reduce risk to market participants and to the financial system. both central counterparties and trade repositories also support regulatory oversight and policymaking through provision of more comprehensive data on the derivatives markets. the board is committed to continuing to work with other authorities, both in the united states and abroad, to ensure that a largely consistent international approach is taken to central counterparties and trade repositories and that their risk - reducing benefits are realized. title viii of the act complements the role of central clearing in title vii through heightened supervisory oversight of systemically important financial market utilities, including systemically important facilities that clear swaps. this heightened oversight is important because financial market utilities such as central counterparties concentrate risk and thus have the potential to transmit shocks throughout the financial markets. as part of title viii, the board also was given new authority to provide emergency collateralized liquidity in unusual and exigent circumstances to systemically important financial market utilities. we are carefully considering ways to implement this provision in a manner that protects taxpayers and limits any rise in moral hazard. supervisory issues although central counterparties will provide an additional tool for managing counterparty credit risk, enhancements to the risk - management policies and procedures for individual market participants will continue to be a high priority for supervisors. as the reforms

daniel k tarullo : assessing the regulatory, economic, and market implications of the dodd - frank derivatives title testimony of mr daniel k tarullo, member of the board of governors of the federal reserve system, before the committee on financial services, us house of representatives, washington dc, 15 february 2011. * * * chairman bachus, ranking member frank, and other members of the committee, i appreciate this opportunity to provide the federal reserve board ’ s views on the implementation of title vii of the dodd - frank wall street reform and consumer protection act ( dodd - frank act ). the board ’ s responsibilities with respect to over - the - counter ( otc ) derivatives fall into three broad areas : consultation and coordination with other authorities, both domestic and international ; efforts to strengthen the infrastructure of derivatives markets ; and supervision of many derivatives dealers and market participants. consultation and coordination the dodd - frank act requires that the commodity futures trading commission and the securities and exchange commission consult with the board on the rules they are crafting to implement title vii. immediately after passage of the act, the staff from the commissions and the board met to fashion a process for this consultation ; at the board, we identified members of the staff with relevant expertise, both here and across the federal reserve system. our staff have commented on proposed rules of the commissions at each stage of the development process to date. in providing feedback, we have tried to bring to bear our experience from supervising dealers and market infrastructure and our familiarity with markets and data sources to assist the commissions. important coordination activities related to derivatives regulation also are occurring within international groups. most prominently, the group of twenty ( g - 20 ) leaders have set out commitments related to reform of the otc derivatives markets that, when implemented by national authorities, will form a broadly consistent international regulatory approach. work on the g - 20 commitments is being carried forward in numerous groups of technical and policy experts, and staff members from the federal reserve are actively participating in these groups. more generally, the board participates in many international groups that serve as vehicles for coordinating policies related to the participants and the infrastructure of derivatives markets. these groups include the basel committee on banking supervision ( basel committee ), which has recently enhanced international capital, leverage, and liquidity standards for derivatives, and the committee on payment and settlement systems, which is working with the international organization of securities commissions to update international standards for systemically important clearing systems, including central counterparties that clear derivatives instruments, and trade rep