by The Compliance Exchange on July 9, 2012
Wall Street traders making big bets on derivatives would receive relief from regulation only if they met certain standards under a rule proposed on Monday.
The Commodity Futures Trading Commission voted to introduce a draft rule that limits how firms can qualify for exemptions through so-called block trades. Banks and brokerage firms place the trades, large private transactions typically negotiated outside the scope of an exchange, as a service to investors that want to purchase a big bulk of derivatives.
Block trades will receive certain exemptions from new derivatives rules, including requirements that the positions are traded on open platforms and that the price and size of the positions are immediately reported to the public. The requirements, which apply to derivatives contracts known as swaps, stem from the Dodd-Frank regulatory overhaul law.
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