Watterson, Suh & Stein: Clearing requirements affect margin requirements, a key mechanism used to mitigate counterparty risk. New clearing rules may substantially costs for users of cleared derivatives because of the higher margin delivery requirements applicable to such transactions.
David Felsenthal & Lily Chu: We do not believe that there is any simple, one size-fits-all remedy for regulation of cross-border swaps. We propose therefore that each transaction-level requirement be considered separately, and that specific rules be adopted for each type of transaction-level requirement.
Charles W. Murdock: Derivatives and other “innovative” financial instruments such as CDOs and synthetic CDOs were largely responsible for the collapse of the economy in 2008. There is little justification for the existence of CDSs and especially naked CDSs. The issue raised CDSs need to be examined in light of how they add or detract from our overall long-term prosperity.
Matthew Kluchenek & Jacob Kahn: Dodd-Frank Act amendeded section 4c(a) of the CEA to add three types of prohibited transactions deemed to be “disruptive of fair and equitable trading.” Market participants in the ever-growing commodities and swaps markets should not take comfort in the CFTC’s delay in filing suit.
David S. Miller: On January 24, the Chairman of the House Ways and Means Committee, released the discussion draft of a bill that would tax derivatives under a mark-to-market system of taxation. This proposal would replace our entire federal system of taxing derivatives with a radically different but infinitely simpler model that would finally correspond to economic reality.
Saule T. Omarova: This article outlines the contours of a regulatory scheme based on mandatory pre-market government licensing of complex financial instruments, including derivatives. This model of product approval regulation explicitly aims to control the amount and types of risk being introduced into the financial system.
