Derivatives reform a bright spot? Who would've guessed?

A bank collapse was the catalyst for the reforms currently underway in the OTC swaps market. Debates over liquidity killing regulations and overly burdensome implementation costs are now the norm. But guess what? The swaps market looks like a shining beacon of hope compared to the rest of the finical markets and the global economy.

In case you haven’t been reading the paper, CDS spreads on several major banks out their debt in the junk category, sovereign M&A is started to seem realistic and as can be seen out my office window, lots of people are “occupying Wall Street” rather than working. Things are not that good and reading the Wall Street Journal makes me think we’re back in 2008.

Shift focus to OTC derivatives reform. Where banks are cutting budgets and people everywhere, they’re conversely pouring money into evolving their swaps businesses. New SEFs are popping up monthly with super smart people and ultra cool technology looking to hire more (subtle plug – check out And despite some banks expecting stagnant profits in their credit and rates swaps businesses in thr first year following regulation implementation, the need to even maintain profits is huge. Because of these factors and more, the derivatives reform industry is booming.

Ok, it may be that I’m biased as that’s what I focus on all day. It also may be that with things so bad in the markets it doesn’t take much for something to look good. But nevertheless, these new regulations will come in some shape or form regardless of who wins the next presedential election, and so the the industry must understand, plan for and implement change whether they like it or not. For some it’s about remaining relevant, for many others, it’s the opportunity of a lifetime. But either way: Yea rah rah derivatives reform.

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