Derivatives battle heats up

We've discussed the on-going movement to regulate and impose order on the OTC derivatives market, particularly credit default swaps. Bloomberg now reports that a furious battle is being waged, largely behind the scenes, in Washington about how to regulate the market, especially the market for credit derivatives that were at the heart of last year's implosion.

The top banks are earning billions from this sort of trading, and are hell bent on fighting the government's regulatory attempts. The fight has been on-going for a year in low-intensity ways, but it is now afire. The proposals so far went beyond what people were expecting; they include a push to move trading to a clearinghouse as well as actual exchanges. The big dealers have backed a single clearinghouse (the ICE), to the detriment of others, but the move to an actual exchange is not going over well. 

For more:
- here's the article

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