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derivatives regulation posts

U.S. Regulators Propose Caps for Derivatives Markets

Posted Oct 14th 2010 10:00AM by Connie Madon (RSS feed)
Filed under: Options, Commodities, Financial Crisis

Commodity exchanges, like the Chicago Board of Trade, place limits on the number of contracts a firm can hold. USAToday reports that the Securities and Exchange Commission has proposed similar caps on derivatives markets.

The proposal would limit firms that trade derivatives to 20% of the clearinghouses, exchanges and other trading venues. Banks that trade derivatives are now subject to new requirements for holding capital reserves as a cushion against loss.

The derivatives market is massive -- a $600 trillion market worldwide. In the U.S., five big banks -- Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), and Wells Frago (WFC) -- account for 97% of the total derivatives held by the U.S. banking industry.

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Will There Be an End to Derivatives Secrecy?

Posted Mar 10th 2010 10:10AM by Connie Madon (RSS feed)
Filed under: International Markets, Insiders, Politics, Financial Crisis

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."

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A milktoast attempt to regulate derivatives

Posted May 14th 2009 2:30PM by Connie Madon (RSS feed)
Filed under: Rants and Raves, Market Matters, Financial Crisis

Derivatives were the main culprit in the financial meltdown and the financial crisis in the US. There has been a loud cry to do something about derivatives, and much outrage and dismay over the secrecy and outright reckless that bankers and investors practiced to make billions in the markets. Many people want to do away with derivatives completely and return to a more rational and basic banking system.

As it stands now, banks are running a second tier of trading that is unregulated and "off the books". Why the government is allowing this to continue may only be accounted for by the strong banking lobby that leans on the Administration and Congress to continue these risky trades.

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