Barney back to being....Barney

“Nothing will really change” the way trades are executed under Frank’s draft proposal, said Kevin McPartland, a senior analyst in New York at TABB Group, a financial-market research and advisory firm. “There’s no reason, at least that I can see, why anybody would go to an exchange.” By Matthew Leising and Shannon D. Harrington Oct. 7 (Bloomberg) -- Legislation proposed by U.S. Representative... [more]

“Nothing will really change” the way trades are executed under Frank’s draft proposal, said Kevin McPartland, a senior analyst in New York at TABB Group, a financial-market research and advisory firm. “There’s no reason, at least that I can see, why anybody would go to an exchange.” By Matthew Leising and Shannon D. Harrington Oct. 7 (Bloomberg) -- Legislation proposed by U.S. Representative Barney Frank would weaken an Obama administration guideline requiring the most common private derivatives to be traded on exchanges or regulated systems. The Massachusetts Democrat, who heads the House Financial Services Committee, released a draft bill Oct. 2 that allows for no change in how standardized over-the-counter derivatives are currently traded as long as they are reported to regulators. The Obama plan, released in August, specifies “mandatory trading” on exchanges or swap-execution platforms that would have to be registered with the Commodity Futures Trading Commission or the Securities and Exchange Commission. “Nothing will really change” the way trades are executed under Frank’s draft proposal, said Kevin McPartland, a senior analyst in New York at TABB Group, a financial-market research and advisory firm. “There’s no reason, at least that I can see, why anybody would go to an exchange.” Frank’s exemption would allow the CFTC or SEC to make rules on record-keeping for swap trades based on credit, energy or interest rates, according to the draft legislation. Foreign regulators also could set record-keeping rules for dealers or “major” swap participants, defined as any firm that has taken a substantial net position through the contracts for reasons other than hedging. Five U.S. commercial banks, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp., were on track through the second quarter to earn more than $35 billion this year trading unregulated derivatives contracts. In the first six months of 2009, those five banks made $35 billion from trading in both derivatives, including interest- rate and credit-default swaps, and cash instruments such as Treasuries and corporate bonds, according to company reports collected by the Federal Reserve. [less]