Costs expected to limit new US swaps venues
Trading in the US swaps market will be concentrated in about 10 trading venues, according to a senior regulator, as the high cost of complying with tough new reporting rules limits potential entrants. The estimate by CFTC Commissioner Scott O'Malia is lower than previous ones.
Mr . O'Malia said swaps trading venues needed the resources to comply with rules aimed at boosting derivatives transparency.
He said too many trading venues in the swaps market might lead to a "fractured market", and this could create liquidity problems.
Meanwhile, investors and dealers are concerned that too dramatic a shift in the rules could hamper swaps trading. "What could impair the market [are] SEFs and SEF rules," said Richie Prager, managing director at BlackRock.
Publication
Financial Times
Date
January 26, 2011
Cross References
Dodd-Frank Act, Title VII, Sec. 733