Dropping Swaps Plan for Volcker Rule May Not Reduce Bank Risk (Bloomberg)

By | June 11, 2010

Some think its too much and some think its too little.  Either way the proposals don’t seem good for the market and its feeling more and more like the resulting rules will push business off shore.

The market-making exemption will have little effect on how banks use swaps to place trades betting on the direction of markets, said Kevin McPartland, a senior analyst at research firm Tabb Group in New York.

“Since so much of OTC derivatives trading by banks can be considered market making or hedging, both of which will presumably be exempt from any Volcker Rule, TABB Group believes the impact on the OTC derivatives markets would be minimal,” he said. “This has gotten to a point where this is all about politics and not market structure, which should be the focus.”

Read the full story at BusinessWeek.com

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