This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

$648 Trillion Market Drags Feet As Deadline Nears

Stocks in this article: BLK

NEW YORK ( TheStreet) -- The $648 trillion over the counter derivatives market will be required to conduct a portion of its trades through a standardized channel--a process known as "central clearing"--by December, but many large players in the industry are in no hurry to comply with the new rules, according to a panel of industry representatives that spoke at a Futures Industry Association conference held in New York Thursday.

While Wall Street has become expert at convincing regulators to delay implementation of rules stemming from the landmark 2010 Dodd Frank Act, Jeffrey Jennings, global head of listed derivatives at Credit Suisse (CS) believes regulators at the Commodity Futures Trading Commission (CFTC) are aiming a "Decemberish-type start date," though they haven't given specifics.

CFTC Chairman Gary Gensler is charged with implementing the new rules.

"Every conversation I have with every CFTC commissioner and every staff member still leads me to believe despite the challenges that will pose, for some subset of market participants--and it's probably going to be a pretty big subset of market participants--and for some subset of products--it's probably going to be wider than what we had expected previously--its going to start about the end of this year," Jennings said.

A call to a CFTC spokesman was not returned.

Despite this timetable, Jennings says "there are some very sophisticated very large very complex institutions that may not be as far along on the preparation cycle as you would expect."

This is a problem, the panelists say, because adoption of central clearing is a lengthy process "unfortunately" providing plenty of work for attorneys, says BlackRock (BLK) global head of trading Richard Prager.

Cost appears to be a big reason companies are dragging their feet.

"I'll never forget the face of our traders the first time they did the trade," says Prager. "It wasn't the complexity. It wasn't like 'How does this work?' It wasn't like, 'Okay, I'm going to get operations on the phone to hold my hand.' It was like, "Look at these fees! This is ridiculous."

Prager says BlackRock has been "an early adopter" of central clearing, because it feels urgency to do so for risk management purposes more than because regulators are pushing for it.

Laurent Paulhac, managing director at CME Group (CME), a big central clearer, acknowledges that costs are a major issue for new clients. However, he warns, 'it is time for them to pull the trigger because we're in May right now. Pretty soon it's going to be Q3 and there's going to be a bit of a jam."

-- Written by Dan Freed in New York.

Follow this writer on Twitter.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs