My, the editorials abound these days about the wacko Dodd-Frank Act and how it will bring ruin to all of us. Now we “learn” that derivatives will move abroad if the governing boards of exchanges and clearinghouses are not controlled by their customers, i.e., if the Commodity Futures Trading Commission goes ahead and requires (as the Securities and Exchange Commission already does!) that a majority of sitting directors should be unaffiliated with the market’s brokers and traders.
Clearing and settlement of over-the-counter derivatives remained a hot topic at the Swiss Futures and Options Association’s 30th Burgenstock meeting last week, withseveral participants outlining a future with higher transaction costs but lower systemic risk as more and more OTC players move their business into arenas with central clearing.
Several exchange execs – including those from NYSE.Liffe, Eurex, and Nasdaq-OMX – made it clear they no longer believe that move will lead to a proliferation of new exchange-traded products that replace OTC instruments. Instead, it will reinforce the rise of clearinghouses – leaving established exchanges to expand their product base by moving into emerging markets.
As if to highlight that trend, a leader from the Mexican exchange MICEX announced it was contemplating the sale of an equity stake to CME Group, which already has a cross-holding in Brazil’s thriving BM&F BOVESPA. Spanish exchange MEFF has a stake the Mexican Derivatives Exchange (MexDer), leaving Argentina’s two futures exchanges – Buenos Aires’s Mercado a Termino de Buenos Aires and the Rosario Futures Exchange (ROFEX) – the only major Latin American players not affiliated with a big-brother exchange in the North.
