Headline: U.S. bows to Wall Street on derivatives
The CFTC and SEC originally proposed that a derivatives trader would be subject to the rule if the firm’s annual notional amount of derivatives transactions exceeded $100 million. However, the final rule approved by the CFTC Wednesday, by a vote of 4 to 1, exempts a much larger group of firms that engage in derivatives, exempting firms whose annual notional trading of derivatives is less than $3 billion. However, the rule won’t become effective until after a phase-in period of more than three years, and until then only firms with more than $8 billion in annual notional derivatives trading would be subject to it. The agency left room to make changes to the rule after it collects two-and-a-half years of data on the industry and finishes a study on the subject. The SEC voted unanimously to approve similar narrower thresholds for security-based swaps — basically, credit-default swaps — along with a phase-in period. Under the proposal, major institutions like J.P. Morgan Chase & Co. JPM -0.94% , Bank of America Corp. BAC +0.34% , Goldman Sachs Group Inc. GS -1.10% , Citigroup Inc. C +0.83% and Morgan Stanley MS -1.36% will almost certainly qualify as dealers.
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