This week has been a busy one for new regulation affecting the futures and options industry. It started off on Monday with the Treasury’s 2010 revenue proposal that included a proposal to eliminate 60/40 tax treatment for futures and options traders. Then on Wednesday, the Treasury Department released a proposal on regulatory reform for over the counter (OTC) derivatives. That one was less of a bombshell.

The Treasury’s proposal requires clearing of all standardized OTC derivatives through regulated central counterparties, says all OTC dealers who create exposure to counterparties would be subject to a “robust regime” of regulation, and would amend the Commodity Exchange Act to authorize the CFTC and SEC to set position limits on OTC derivatives that perform a significant price discovery function in futures markets.

 Clearing of OTC derivatives through central counterparties has been floated as a possibility for some time, as has the idea of position limits for OTC derivatives. Industry leaders are applauding the Treasury’s plan so far. In a statement, ISDA CEO Robert Pickel said “This proposal is an important step toward much-needed reform of financial industry regulation.” Will the latest proposal impact your trading? Let us know by leaving a comment below.

Tags: 60/40 tax treatment, CFTC, Commodity Exchange Act, ISDA, OTC, SEC, Treasury

This entry was posted on Friday, May 15th, 2009 at 9:44 am and is filed under Regulatory/actions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.