The Dodd-Frank Act has recently registered JPMorgan Chase & Co.(NYSE:JPM), Goldman Sachs Group, Inc.(NYSE:GS) and Barclays PLC(LON:BARC) under swap-dealer divisions. They stand out as the first banks to register swap-dealer divisions with excellent collaterals, trading capacity and capital.
Many well-known banks in U.S., U.K., France, Germany, Switzerland and Japan already marked their position in the list of 65 trading units as stated by the Commodity Futures Trading Commission. This list expected to grow remarkably with companies having at least $8 billion in swap-dealing business in October and they were required to register by the end of last year.
A telephonic interview with CFTC Chairman Gary Gensler yesterday showed that it is a good sign and he stated that “This is at the heart of financial reform: dealers registering and coming under commonsense rules of business practice, reporting, capital and margin and that the public gets to see the actual transactions,”
For the last three decades there were no federal regulations on the oversight of the market until Dodd-Frank rules came into the picture because swap trades compensated the 2008 credit crisis and acted as the U.S. rescue of American International Group, Inc.(NYSE:AIG) It has been improving the oversight of market from the past two years.
Oliver Wyman, from Marsh & McLennan Companies, Inc.(NYSE:MMC) estimated that many biggest financial firms in swap dealing produce more than $30 billion in annual profit. Swap dealers will be going to face hard reporting and trading standards in the future.
Dodd-Frank regulations will not be faced immediately by the swap dealers as US or international authorities have to still complete with the capital and margin rules. Until mid-March, there will not be any promising trades at central clearing houses in US on interest rate and credit trades. The CFTC will also come into picture when Dodd-Frank rules will be applicable on trades.
Interest rates and credit trades will also be registered in the database by the swap dealers. All the biggest US swaps dealers are also included in the list of 65 entities according to the comptroller of the currency office. They have also stated that at the end of September, JPMorgan Chase & Co.(NYSE:JPM) leads the list with $72 trillion in derivatives contracts, Bank of America Corp(NYSE:BAC) with $64 trillion and Citigroup Inc.(NYSE:C) with $55 trillion as the third largest.
Six divisions are also included in Goldman Sachs Group, Inc.(NYSE:GS) Six entities have been registered by Morgan Stanley including the unit of Morgan Stanley and Co. International PLC in London. Gensler also stated “I would anticipate over time that we would see some particularly if people are transacting or dealing over $8 billion of swaps in the bilateral world,”
Because of the size of the derivative trading businesses shell and BP weren’t on the top list of Energy Traders. Deutsche Bank AG(FRA:DBK) registered energy trading unit DB Energy Trading LLC, while JPMorgan Chase & Co.(NYSE:JPM) registered as J.P. Morgan Ventures Energy Corp.
Shares of the following:
The shares of JPMorgan Chase & Co.(NYSE:JPM) is down by 0.20% to close at $44.57
The shares of Goldman Sachs Group, Inc.(NYSE:GS) is down by 0.55% to close at $130.94
The shares of Barclays PLC(LON:BARC) is up by 0.15% to close at GBP276.00
The shares of Marsh & McLennan Companies, Inc.(NYSE:MMC) is down by 0.08% to close at $35.49
The shares of American International Group, Inc.(NYSE:AIG) is down by 0.82% to close at $36.18
The shares of Bank of America Corp(NYSE:BAC) is down by 0.58% to close at $11.96
The shares of Citigroup Inc.(NYSE:C) is up by 0.34% to close at $41.39
The shares of Deutsche Bank AG(FRA:DBK) is up by 0.82% to close at EUR34.55
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