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TABB Group Pinpoints OTC Derivatives Regulatory Impact Of The Wall Street Reform And Consumer Protection Act Of 2009 (H.R. 4173)

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Courtesy of TABB Group

by Kevin McPartland

hat tip ~ Mondo Visione

 

TABB Group Pinpoints OTC Derivatives Regulatory
Impact Of The Wall Street Reform And Consumer Protection Act Of 2009
(H.R. 4173)


- New Study Analyzes The Bill’s 200-Plus Pages Covering
Derivatives, Outlines Potential Industry Impact And Gives A Timeline
Leading To US Senate Passage

- Says New Competition Lies Ahead For
Dominant Major Dealers From New Group Of Smaller, Nimble Tech-Savvy
Dealers

 

The global financial markets were watching closely in December 2009
when the US House of Representatives passed The Wall Street Reform and
Consumer Protection Act of 2009 (H.R. 4173) that, if made law, would
bring with it the most sweeping changes to the derivatives market since
its inception.

“The 200-plus pages of derivatives-focused legislation leaves many
questions unanswered,” says Kevin McPartland, senior analyst at TABB
and author of a new study published today, “OTC Derivatives U.S.
Regulatory Update,” adding, “The road ahead will continue to be long
and bumpy as the U.S. Senate takes up the debate when back in session
on January 20th.”

McPartland analyzes the language of the bill, describes what the OTC
derivatives reforms can mean for the marketplace and what lies ahead
once the Senate passes their version of the bill by early summer 2010
before a compromise bill is readied for President Obama’s signature.
“Depending on the complexion of the bill enacted,” he says, “there
could well be a new landscape on the near horizon and a new set of
players. The end result will not be a risk-free market, but a market
with more opportunities for more participants than we had before.”

In the new environment, he explains, although major dealers
completely dominate the market today, competition will increase. “This
includes smaller, more nimble, tech-savvy, new dealers capable of
competing with the bigger dealers, assuming that the new regulations
level the playing field.” He adds that anonymous trading and clearing
will allow ‘near-dealers’ directly into the markets as smaller buy-side
firms begin setting up sell-side OTC trading desks.

 

 

 

 

The new TABB Pinpoint study with 16 highly descriptive, multi-level charts and graphs, supported by a video summary at http://www.youtube.com/watch?v=xdeVjEf-xak,
examines the current state of the OTC derivatives market as it moved
past the 2008 credit crisis, contains additional analysis from
Washington, D.C.-based policy analysis firm Capital Alpha Partners,
LLC, breaks down the bill step-by-step into its four components
covering clearing, trading, registration and reporting, outlines the
potential impact of the legislation to the financial services industry,
discusses which components of the bill will change or disappear and why
and lays out a timeline for ultimate passage of the bill into law.

According to McPartland, the Pinpoint study can provide both an
excellent point-of-entry overview as well as a detailed guide to the
rather complicated issues. “Our goal at TABB was to clarify the
intentions and the ramifications of the proposed law – the House
version consists of more than 200 pages dealing specifically with OTC
derivatives alone – and outlines the impact on the financial industry,
including potential losers and winners.”

The visual presentations include:

  • US legislative process flow
  • Derivative reform legislative overview
  • Market participant designations per H.R. 4173
  • ICE Trust US and ICE Clear Europe volume and open interest
  • CME CDS Clearing volume and open interest
  • SwapClear interest rate swap open interest/dealer notional outstanding
  • CBOT interest rate swap futures open interest
  • CME Clearport average daily volume (ADV)

The TABB Pinpoint study is available for download by TABB Group
Derivatives Research Alliance clients and pre-qualified media at https://www.tabbgroup.com/Login.aspx.

For an executive summary or to purchase the report, please visit http://www.tabbgroup.com/PublicationDetail.aspx?PublicationID=550&MenuID=34&ParentMenuID=30&PageID=32, or write to info@tabbgroup.com.

 

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