Reshaping the OTC derivatives market

Anne PlestedMany thanks to our colleague David Petersons for the following interesting observations:

While much remains to be resolved through rule-making, this Capco article discusses the impact of the Dodd-Frank Act on OTC derivatives, outlines the key elements of the Act affecting OTC derivatives trading and provides an update on where the rule-making stands.

The predictions about four possible implications of the legislation on the derivatives landscape are interesting, as is the set of key questions that firms should consider as they reshape their business models to meet the new regulatory environment.

Key effects of the new OTC regulatory environment are predicted to be:

•       Yes, there will be regulatory arbitrage
•       Derivatives will become cheaper, eventually!
•       CCPs: too many, not all will last
•       Derivatives clearing will be less about clearing and more about adding value

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