A provision agreed to last week by the Commodity Futures Trading Commission could raise the cost of swaps trading for end-users, the Wall Street Journal reports November 22.
On November 19, the CFTC proposed a rule that would give swaps dealers and end-users a 15-minute time window to report large trades. But, Deutsche Bank systemic risk management head Athanassios Diplas told Dow Jones Newswires, the rule would make it harder for dealers to hedge the risk they assume when trading – and the cost of a swap could increase for both dealers and end-users.
"The cost is borne by either the original client or by the dealer – and the beneficiary would be a third party," the Journal quoted him as saying.
While CFTC chairman Gary Gensler expressed confidence that the proposed rule would improve swaps pricing for smaller end-users, it doesn't have the unanimous support of the agency's commissioners. CFTC commissioner Scott O'Malia said he wasn't sure the rule would be effective.
"I am not convinced we are doing the best thing by mandating a 15-minute time limit … while providing little to no direction on the reporting of all remaining trades," Reuters quoted him as saying.
◦ Asset Liability Management
◦ Portfolio Risk
◦ Sensitivities & Hedging
◦ Stress Testing & Scenario Analysis