It was probably only a matter of time before someone in Congress whipped up a bill on the current red hot issue in the derivatives industry, credit default swaps (CDS) trading platforms. And today someone did, when Sen. Tom Harkin (D-IA), Chairman of the Senate Agriculture Committee, introduced the Derivatives Trading Integrity Act, which aims to “establish stronger standards of openness, transparency and integrity in the trading of swaps and other over-the-counter financial derivatives.”
Harkin’s bill calls for all futures contracts to trade on a designated contract market or a derivatives transaction execution facility, and amends the Commodity Exchange Act to eliminate the distinction between excluded and exempt commodities and regulated, exchange-traded commodities. Under his bill, futures contracts for all commodities would be treated the same, and all would fall under sole regulatory authority of the Commodity Futures Trading Commission (CFTC).
The battle between exchanges to create a CDS platform has been raging since October, and at least one CDS clearing facility is expected to be launched by the end of this year.
For more on CDS trading platforms and the regulatory issues surrounding them, check out the December issue of Futures magazine, available online Nov. 24.
