CFTC to weaken derivatives rules

The Commodity Futures Trading Commission is set to pressure from global banks to loosen derivatives regulations.

The Financial Times reports commissioner Mark Wetjen has recommended the CFTC alter its proposed rule regarding swap execution facilities.

The rule would require institutional dealers to get price quotes (RFQs, or requests for quote) from five dealers in an effort to increase market participation and transparency.

However, Morgan Stanley’s comment letter states, “Restrictive trading protocols and large block sizes, in combination with the Proposed Rules, will be even more harmful to liquidity, in our view.” This echoes the view of many other big banks.

The FT reports Wetjen “is planning to replace the five RFQ proposal with a rule that sets a minimum of two.”

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.