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Rounds, Duckworth Introduce Options Markets Stability Act

Legislation aims to facilitate liquidity in options markets by calling on bank regulators to tailor capital requirements

WASHINGTON—U.S. Senators Mike Rounds (R-S.D.), a member of the Senate Banking Committee, and Tammy Duckworth (D-Ill.) introduced the bipartisan Options Markets Stability Act. The Options Markets Stability Act would facilitate liquidity in options markets by calling on bank regulators to move toward a newer, internationally accepted risk-sensitive accounting standard.  


“The current bank risk exposure regulations have had the impact of directing capital away from centrally cleared options markets,” said Rounds. “This has had the effect of hampering liquidity and violates one of the principles of post-crisis regulation: strengthening centralized clearing and avoiding riskier over-the-counter trading. The lack of liquidity can, in the most extreme cases, lead to flash crashes, which threatens the broader stability of our markets. The Federal Reserve agreed in 2014 to move towards the internationally accepted, risk-sensitive standardized approach to counterparty credit risk (SA-CCR). Since that time, however, the Fed has delayed implementing the new standard. I’ve asked the Fed repeatedly about its timeline for adoption and received no response. American investors can’t continue to wait. Our commonsense legislation would modify current capital requirements to reflect actual risk and would strengthen and safeguard our economy.” 


“This bill will streamline the regulatory process to guarantee the viability of centrally-cleared options markets while maintaining the safety and soundness of our financial system. These are important steps to help businesses in Illinois and across the country grow and have access to capital,” said Duckworth. “I’m proud to work with Senator Rounds on this bipartisan legislation.”


The Options Markets Stability Act has the support of the Chicago Board Options Exchange. The House Companion, H.R. 5749, was passed unanimously by the House of Representatives earlier this year.     



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