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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Re: Derivatives rules -- loose as usual||Date: 5/16/2013 4:29 PM|
|Author: SuisseBear||Number: 423040 of 510631|
Now, according to officials briefed on the matter, the Commodity Futures Trading Commission has agreed to lower the standard to two banks. About 15 months from now, the officials said, the standard will automatically rise to three banks. And under the trading commission’s new rule, wide swaths of derivatives trading must shift from privately negotiated deals to regulated trading platforms that resemble exchanges.
A delay for sure but no change in direction.
The SEC has been trying fruitlessly to set up an open exchange for derivatives since 2005.
The SEC is toothless... the CFTC - not so much. Central clearing for CDSs and IRSs is now mandatory. We shall see about SEFs.
The only thing that will save the U.S. banking system from another crash would be the reinstatement of Glass-Steagal.
I'm all for Glass-Steagall but it would not have directly prevented the RE bubble, and the 2008 crash.
Imposing margin requirements for derivatives (e.g. through central clearing) on the other hand WOULD have stopped e.g. AIG getting itself into trouble at an early stage - they would simply have run out of collateral needed to back their deals.
Of course, stopping ZIRP and cheap credit would take away a prime driver for bubbles forming in the first place. Looks like too many love our casino economy though.
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