Sunday, July 8, 2012

Floodgates on U.S. derivative reforms set to open



Bumpy Flight ahead..  Make sure your tray is in the upright position. Reuters reports that the U.S. swaps regulator is set to finalize this week a critical reform that will trigger banks and traders having to comply with costly new derivatives rules.  The Commodity Futures Trading Commission will vote on Tuesday on a definition of a "swap," which will start a countdown on compliance dates for big swaps players to start registering with regulators and reporting their trades.

Market watchers say this is a big step in regulators' efforts to bring the $650 trillion over-the-counter swaps market out of the shadows.  The CFTC is expected to vote unanimously to finalize a swap definition that closely follows what is laid out in Dodd-Frank. Gabe Rosenberg, an attorney at Davis Polk, called it a "critical moment for the industry."

The toughest requirements will fall on those institutions labeled swap dealers, which are mostly banks with more than $8 billion in swap trades annually…..

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