Mr. David A. Stawick
Secretary
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, N.W.
Washington, D.C. 20581

Ms. Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 29549-1090

Re: Proposed Limits on Ownership or Voting Power of Derivative Clearing Organizations, Designated Contract Markets, and Swap Execution Facilities; RIN 3038-AD01 Ownership Limitations and Governance Requirements for SecurityBased Swap Clearing Agencies, Security-Based Swap Execution Facilities, and National Securities Exchanges with Respect to SecurityBased Swaps under Regulation MC; Exchange Act Release 63107

Dear Ms. Murphy and Mr. Stawick:

The Securities Industry and Financial Markets Association (“SIFMA”)1 appreciates the opportunity to comment on the Commodity Futures Trading Commission’s (the “CFTC”) and the Securities and Exchange Commission’s (the “SEC”; the CFTC and the SEC are together referred to as the “Commissions”) proposed rules regarding conflicts of interest with respect to derivatives clearing organizations (“DCOs”), designated contract markets, swap execution facilities, clearing agencies that clear security-based swaps (“Clearing Agencies”), security-based swap execution facilities and national securities exchanges that post or make available for trading security-based swaps.2

The Commissions’ proposals include structural governance requirements and limits on ownership and voting power. Our comments are focused on the proposed limits on ownership and voting power, and more specifically are focused on the proposed limits applicable to DCOs and Clearing Agencies.

I. Introduction

DCOs and Clearing Agencies are intended to reduce systemic risk by acting as highly creditworthy central counterparties that effectively manage the risk of swap transactions. But because they centralize risk, these entities could become significant sources of systemic risk themselves. As such, it is essential that DCOs and Clearing Agencies have robust governance and risk management. At the same time, DCOs and Clearing Agencies also must evolve to meet the needs of the innovative markets they serve. In order to accomplish these goals, DCOs and Clearing Agencies require access to capital and leading-edge risk and product expertise. The most likely sources of both are swap dealers, major swap participants, and the other financial institutions included in the definition of “enumerated entities,” which are described in footnote three below.

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