Tarullo Says Derivative Clearing Houses Can Cut Financial Risk
Clearing houses for derivatives can help reduce risk to the financial system, Federal Reserve Governor Daniel Tarullo said in written remarks prepared for House Financial Services Committee testimony tomorrow.
“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,” Tarullo said.
The House committee, chaired by Alabama Republican Spencer Bachus, called the hearing to assess the “regulatory, economic and market implications” of the derivative regulations of the Dodd-Frank Act, which overhauls supervision of the financial system. Tarullo will testify with Securities and Exchange Commission Chairman Mary Schapiro and Commodity Futures Trading Commission Chairman Gary Gensler.
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