WASHINGTON — Debate in Congress over whether to restrict swaps-trading by commercial banks has taken the spotlight away from other proposed derivatives rules that may soon be approved.
Lawmakers are set to negotiate a bill passed May 20 by the Senate that would require standardized derivative trades to be cleared through a third party and traded on an exchange or so-called swap-execution facility; place a fiduciary duty on dealers in transactions with municipalities; and subject the foreign-exchange swaps market to regulation.
As the large Wall Street banks that dominate the $615 trillion over-the-counter derivatives market, including Goldman Sachs and JPMorgan Chase, have focused on trying to kill the most contentious rule — one that would require them to push out their swaps- trading desks to subsidiaries — the other provisions have moved a few votes away from law.
“They cannot fire at everything that moves; they just don’t have that many bullets these days,” said Karen Petrou, managing partner at Federal Financial Analytics Inc., a Washington consulting firm specializing in financial regulation.
The derivatives language is one part of the larger financial regulatory overhaul.
