The FT reported on Thursday that regulators on both sides of the Atlantic are trying to better coordinate their attempts to bring the largely over-the-counter derivatives market under their control.
The bigger news, as we see it, is the fact that the Obama administration looks like it is succeeding in its attempts to push through reform of the heretofore unregulated $4,500bn market.
Here’s Reuters:
The House of Representatives Financial Services Committee voted 43-26, largely on party lines, in favor of the rules after months of lobbying by major banks and corporations that helped shape the legislation modified in recent days during House debate from an earlier administration proposal.
The vote marks a step forward in President Barack Obama’s broad effort to tighten bank and capital market regulation to prevent a repeat of last year’s financial crisis.
Committee Chairman Barney Frank tweaked his version of the administration’s bill, seeking a balance between reducing the systemic economic risks posed by over-the-counter derivatives and preserving their role in risk-hedging done by companies as part of their normal business operations.
A parallel bill is in the House Agriculture Committee, where an aide said a vote may come next week. Frank and Representative Collin Peterson, chairman of the Agriculture Committee, would then seek to reconcile their bills.
Legislation has also been filed in the Senate, but financial reform there has moved very slowly.
A full House vote on a financial-reform package with at least a half-dozen measures is expected next month. The outlook was unclear in the Senate, where lawmakers are struggling to meet an end-of-the-year target for completing reforms.
Derivatives – easier to overhaul than US healthcare. There’s a lesson there, somewhere…
Related links:
Proposed versions of derivatives legislation as of 10/9/09 – freerisk
Barney Frank, pragmatic derivatives defender – FT Alphaville
CFTC calls for sweeping OTC derivatives regulation – FT Alphaville
Wall Street makes significant concessions on OTC derivatives – FT Alphaville