New margin segregation rules in the US are heaping costs on the sell-side but does that not make the reforms bad for clients asks Dan Barnes?
On October 30 2013, the Commodity Futures Trading Commission
set out safeguards for buy-side clients' collateral from being
used by brokers to support their own or other clients' funding
The CFTC outlined protection for buy-side assets held as
margin for futures and uncleared over-the-counter derivatives
trades in the paper 'Enhancing protections afforded customers
and customer funds held by futures commission merchants and
derivatives clearing organizations’.
However there are concerns within the industry that these
protections will raise the costs of derivatives trading yet
further, making the use of derivatives as hedging instruments
less economically viable, without tackling the more serious
threats to buy-side firms’ assets.
Matt Simon, senior analyst at Tabb Group, says, "The
regulatory jabs have been flying in left and right, inching
closer to taking down even the larger FCMs. They are paying
more attention to the concept of having a safer customer,
becoming more transparent with them about the costs that they
are facing as an FCM and what it will mean in terms of
increasing their execution fees, clearing fees and other
This article is available to subscribers and registered users
Please log in to continue reading.
Not yet registered? Take a free trial.
If you have already taken a free trial you
have ongoing access to the analysis section of FOW.com including this story.
Log in using your details below to read.
Already have an account? |