Academic

Treasury's Proposal on Derivatives Regulation

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

It's quite a piece of proposed legislation.  First, there's the creation of OTC markets for standardized derivatives.  Which may  be useful, may not be.  Second, there's "comprehensive regulation" of OTC dealers and major market participants. Which I must think the former investment banks and hedge funds are going to fight.  The devil will be in the details; I'll be interested to see whether Congress ends up taking a crack at defining those covered by the regulatory bit of the statute, or whether it delegates that task to an agency.  The current draft would have the CFTC and SEC do the defining, and requires rules implementing the statutes and filling out the terms like "market participant" within 180 days of passage.  It also requires that the rules be uniform across the agencies and - and I like this bit - lets Treasury come in and make the decision if the SEC and CFTC can't agree.  You can find the text of the legislation proposed here.

Full post as published by Conglomerate on August 12, 2009 (boomark / email).