Wall Street banks are warming up to a new derivatives rule they previously lobbied against, reports the New York Times.
The rule, nicknamed the swaps push-out, limits how banks can use derivatives to bet on market moves. It’s part of the suite of regulations passed in the wake of the financial crisis.
Previously, explains the Times, banks with retail and investment arms could trade the risky derivatives as a part of their traditional operations, which benefitted from government protection. The rule no longer allows them to do so.
Banks said the rule makes their trades less efficient, and was fighting the change. But now, it appears banks are taking the initiative, and pushing the trades to offshore, unprotected, subsidairies.
Read more here.