On Tuesday, exchange leaders met with the Securities and Exchange Commission to discuss potential regulations for dark pools. This included the chief executive officers from?NYSE Euronext (NYSE:NYX),?Nasdaq OMX Group Inc. (NASDAQ:NDAQ)?and BATS Global Markets Inc.?
Now on Thursday, the?House Financial Services Committee will conduct a hearing for ?several bills regarding the regulation of derivatives. They have?already passed in the Agriculture Committee.
In a Wednesday New York Times editorial, “Not Enough Reform on Derivatives” the piece, written by the New York Times?editorial board,?opposes the bills.
Highlights of their opposition includes the following:
- One bill would gut a provision of the Dodd-Frank financial reform law that effectively requires banks to spin off their riskiest derivatives transactions into separately capitalized uninsured subsidiaries. The spinoff provision, which starts phasing in this year, is important for shielding taxpayers from future bailouts.
- ?Other bills would let the banks continue to take undue risks. One would undercut the range of new derivatives rules under Dodd-Frank ? on transparency, capital and business standards ? by delaying and weakening their application to foreign branches of American banks. It would require the Commodity Futures Trading Commission, the main regulator of derivatives, to issue its international rules jointly with the Securities and Exchange Commission. That would yoke the C.F.T.C., which has been an effective and timely proponent of international rules, to the weak and tardy S.E.C., virtually ensuring that strong rules would not get done soon, if ever.
- In writing the rules, regulators have gone to great lengths to consider bank concerns. If Congress further indulges the banks by approving these bills, the effort to reform derivatives, which is central to overall financial reform, will be turned into a farce.