Andrew Harrer/Bloomberg NewsScott O’Malia, left, and Jill Sommer, with the Commodity Futures Trading Commission, and the chairman, Gary Gensler, at a meeting in Washington last year.
Federal regulators are considering backing off a plan to curb Wall Street’s control over the derivatives market, another potential win for the big banks.
Last fall, the Commodity Futures Trading Commission proposed rules that would prevent a bank or financial firm from controlling more than 20 percent of any one derivatives exchange or trading facility. Now, regulators are discussing lowering the cap, according to people with knowledge of the matter.
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The rule, stemming from the Dodd-Frank financial regulatory overhaul, was aimed at tearing down monopolies in the $600 trillion market, which played a central role in the financial crisis.
But as DealBook reported on Thursday, Wall Street has since begun a fierce behind-the-scenes effort to delay or water down many of the regulatory changes passed by Congress in the aftermath of the crisis. Regulators recently agreed to put off the derivatives rules for up to six months.
The commodities agency has held nearly 50 private meetings on the monopoly issue alone, hosting Wall Street titans like Goldman Sachs and Morgan Stanley. A group of regulators also traveled to New York this spring to tour some derivatives exchanges.
Afterward, regulators began reconsidering their proposal to cap bank ownership at 20 percent, according to one agency official. The regulators worried that, without financial support from banks, exchanges could fold, this person said.
The agency has not yet reached a final decision, according to the people. An agency spokesman did not return a request for comment.
As Wall Street pushes the commodities agency to soften the proposals, federal prosecutors are calling for regulators to beef up the rules.
Alex Wong/Getty ImagesChristine Varney, the Justice Department’s antitrust chief.
The proposals “may not sufficiently protect and promote competition in the industry,” Christine Varney, the Justice Department’s antitrust chief, said in a December letter to regulators. Ms. Varney, who will soon leave the government to join Cravath, Swaine Moore, likened the situation to “three or five largest airlines controlling all landing rights at every U.S. airport.”
As The New York Times reported late last year, the Justice Department has been investigating possible anticompetitive practices in the derivatives industry.
Article source: http://feeds.nytimes.com/click.phdo?i=1baa2cc1b29a38eaceb670911b7ffc01
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