Reduced per-deal profits on over-the-counter derivatives will be more than compensated for by surging trading volumes, Ken Griffin, the chief executive officer of the Citadel hedge fund, said last week at a Federal Reserve event. Broader participation and gains in efficiency will make financial instruments like interest rate swaps and credit derivatives more attractive to investors.

"This is a giant circular web of risk that evolves into counterparty risk, and not economic risk transference," he said, according to Dow Jones Newswires. "Clearinghouses solve that problem and solve it in a cost-effective way. The argument that we will incur dramatic costs by moving toward straight-through processing and confirmation … is simply false."

Increased liquidity may be one of the main benefits, although firms will also be able to take comfort from the insulation that clearinghouses provide, buffering both sides of the derivatives transaction from counterparty risk.

The hedge fund has traded derivatives for over 20 years, reported Dow Jones Newswires, and has worked with CME Group on credit default swaps.

One detail that remains unclear is the definition of "standardized derivatives," since the Dodd-Frank reform bill requires that for derivatives to be centrally cleared, they must meet certain standards. It’s possible that some dealer banks may move to specialize in nonstandard, boutique derivatives.