U.S. Justice Department Letter Calls For Stronger Ownership Rules on Swaps

[ProSense]

U.S. Justice Department Letter Calls For Stronger Ownership Rules on Swaps

By Silla Brush

The U.S. Justice Department, which has been investigating possible anticompetitive practices in derivatives markets, called for “more stringent” limits on the control banks and swap dealers have over clearinghouses and trading platforms.

The Justice Department said aggregate caps on ownership and higher requirements for independent directors on corporate boards and risk committees would boost competition in the $583 trillion swaps market.

The comments came in letters to the Commodity Futures Trading Commission and Securities and Exchange Commission signed by Christine A. Varney, assistant attorney general in the antitrust division. The letters, dated Dec. 28, were responding to rules the agencies have proposed on clearinghouses and trading platforms, required under the Dodd-Frank Act.

“Major dealers might use their control of a dominant trading platform to disadvantage rivals by refusing to trade their products or to continue trading over the counter even in instances where exchange trading is feasible,” Varney wrote.

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