Asset owners to bear the brunt of the costs imposed by regulators for trading derivatives
Regulators have set out to
restrict business that they consider risky and creating
instability in the system, writes Dan
Their methods are relatively
simplistic - firstly, by increasing the cost of
'risky’ business, the risk/reward balance is
skewed and the business becomes less appealing.
Secondly, by asking trading firms to keep capital with third
parties to cover trading positions, they intend to isolate the
risks posed to the rest of the system.
Finally, in some cases countries
are imposing limits on certain types of trading that are
perceived to be problematic for other firms, such as
high-frequency trading. Fundamentally each method creates cost
within the financial system.
"I think it’s fair to say all of those costs, if
they were to happen, would get passed through to clients," says
Jane Lowe, director of markets at trade body - the Investment
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