Wednesday, November 28, 2012
It's a start
And as fine a note as any to begin Elizabeth Warren's Senate career with.
Wall Street’s largest swap dealers, including Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM), will be required to guarantee trades at clearinghouses starting in March under a rule made final today by the top U.S. derivatives regulator.Sure, it doesn't cover all such transactions, but ease of use, familiarity and a desire for some surety by traders will increase its use over time and may lead other markets to adopt it.
The five-member Commodity Futures Trading Commission voted unanimously in a private process to complete the final determinations, the agency said in a statement. The rule, which had been scheduled for a public vote, determines which credit and interest-rate swaps must be guaranteed at clearinghouses owned by LCH.Clearnet Group Ltd., CME Group Inc. (CME) and Intercontinental Exchange Inc. The commissioners can vote on paper outside of their public meetings in a process known as seriatim.
“Central clearing lowers the risk of the highly interconnected financial system,” CFTC Chairman Gary Gensler said in statement. “It also democratizes the market by eliminating the need for market participants to individually determine counterparty credit risk, as now clearinghouses stand between buyers and sellers.”
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