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For the past few weeks we've been hearing cries from Europe concerning how to regulate or ban derivatives trading. Now the word has crossed the pond and we are hearing the same complaints here in the U.S.
We have a parade of regulators who want to do something about derivatives trading. First we heard from Gary Gensler, chairman of the Commodity Futures Trading Commission, who said: "Standard credit default swaps and other privately traded, over-the-counter derivatives need drastic reform." He went on to say: "The only parties that benefit from a lack of transparency are Wall Street dealers."
Gensler is calling for post-trade transparency or a "tape," which would report trades as soon as they are done.
Next we heard from Theo Lubke, head of markets infrastructure at the Federal Reserve. He says: "Post trade transparency was an important priority." He went on to say, "The lack of good knowledge by regulators about OTC derivatives is not a tenable long-term equilibrium."
Next comes Elizabeth King, associate director of the SEC. She said she is "very supportive" of increased transparency.
So we have this group of regulators saying that regulation of derivatives is a must. Stop procrastinating and do it! It's not complicated. For over a hundred years commodity traders have placed their trades through clearing houses.
Do you believe that derivatives trading needs to be regulated?
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