A lead US regulator has circulated a draft proposal in an attempt to broker a deal that would finalise planned rules for the $639 trillion derivatives market.
Bart Chilton, a Democratic member of the five-person Commodity Futures Trading Commission, has in recent days internally proposed a compromise on rules for derivatives marketplaces, or “swap execution facilities”, according to people who have seen the document. The proposal is said to have received preliminary support from a majority of the commission. Gary Gensler, CFTC chairman, remains uncommitted. SEFs have become the latest battleground at the CFTC as global banks attempt to weaken SEF rules and maintain their control over derivatives dealing while smaller institutional investors and traders fight to end the current dealer-dominated system.
The original SEF proposal was intended to increase price transparency and encourage wider participation in the market beyond the limited number of large dealer banks. Since then, it has come under attack from banks including Morgan Stanley, Deutsche Bank and Barclays that have argued that the number of RFQs should be left to the market and not imposed by regulators. In his recommendation, also in consultation with other commissioners, Mr Chilton proposed that the CFTC require market participants to send out five RFQs for benchmark interest rate swaps and the latest version of credit default swap indices, also known as “on the run”. For older CDS indices, Mr Chilton has proposed allowing SEFs to set their own RFQ rule with a two RFQ minimum.
Full article (FT subscription required)
© Financial Times
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article