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Chatham Financial Supports Murphy Amendment in House Derivatives Bill

The Murphy amendment would limit the definition of "major swap participant" to firms doing a amount of speculative trading or posing a threat to the financial system.

Chatham Financial, an independent interest-rate and foreign exchange risk management advisor, voiced its support for the adoption of a key amendment in the House of Representatives bill on financial regulation passed on Friday. The amendment was in a measure offered by Rep. Scott Murphy (D-NY) on derivatives legislation.

As part of H.R 4173, the Wall Street Reform and Consumer Protection Act of 2009, the Murphy amendment would limit the definition of “major swap participant” to those firms that either do a substantial amount of speculative trading or that have derivative positions that are large enough to pose a threat to the financial system.

The House also rejected other amendments of the Act before final passage of the bill, which would have granted certain authority to regulators on cash-margin requirements; forced end users to execute certain trades on a “swap execution facility”; and introduced legal uncertainty for futures trades.

“The amendment takes a positive step toward recognizing and differentiating business end users from large financial institutions,” stated Dave Hall, chief operating officer of Chatham Financial. “The final votes on these amendments demonstrate that policymakers understand the need to strike an appropriate balance between protecting against systemic risk and promoting transparency, while preserving the ability of American businesses to prudently manage risks,” stated Hall in his firm’s release.

According to Chatham Financial, the Senate Banking Committee will continue to work on revisions to their draft derivatives bills, and the Senate Agriculture Committee is expected to release its own draft shortly. “We are hopeful that the Senate will build on the progress made in the House to ensure cost effective access to these important risk management tools,” stated Hall.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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