The Dodd-Frank Act, the financial reform measures that Congress passed in the summer of 2010, (or more aptly name The Frankly-Do-nothing Act) called for the majority of the $600 trillion derivative market, including credit default swaps, to be traded on exchanges and for transactions to go through clearing houses.
None of this has happened. That’s right, zip, zero, nada. Prices of credit default swaps can still be based solely on a dealer’s say-so. And yes, these credit default swaps were a main trading instrument that led to JP Morgan's recent $2 billion trading loss. The folks on Fraud Street have no interest in changing the way things are done. Why would they want to put an end to their private profit party?
Now, they are lobbying vigorously against the Commodity Futures Trading Comission's proposal that swap execution facilities provide market participants with easily accessible prices on “a centralized electronic screen.” But of course the commission’s rule would eliminate the one-to-one dealings by telephone that are so lucrative to the fraud street banksters.
Gretchen Morgenson writing in the New York Times, hits the nail on the head writing about regulations in the United States “The British, at Least, Are Getting Tough
“It’s hard to believe, in the wake of the Libor mess, that Wall Street and its supporters in Congress would continue to battle against price transparency in any market. Then again, that’s precisely what they did after the credit crisis.....With each new financial imbroglio, the gulf widens between Main Street’s opinion of Wall Street and the industry’s view of itself. “
When it comes to the real players in the US financial markets, there is about as much regulation as at a swap meet.
Trade well and follow the trend, not the so-called “experts.”
President & Founder - TradingAdvantage