SEC's Chief Economist Testifies on OTC Credit Derivatives Market

James A. Overdahl, the SEC's Chief Economist, testified on July 9, 2008, before the Subcommittee on Securities, Insurance, and Investment of the Senate Committee on Banking, Housing, and Urban Affairs, on Testimony Regarding Reducing Risks and Improving Oversight in the OTC Credit Derivatives Market.  In the course of his remarks, he also talked about clearance and settlement facilities for securities and made the following interesting statement:

Next, I'd like to share with you a quote from a report on clearance and settlement published by the International Securities Market Association in 1999:

These days, anybody can replicate the contracts an exchange can offer; anybody can set up the hardware to become an electronic exchange. Maybe the only way left to differentiate yourself is by really good clearing and settlement.

I wonder if NYSE and Nasdaq would agree with that?