“The New Regulatory World in 2011”
Thomson Reuters Special Report, March 18, 2011
Andrea Kramer singled out clearing as a major cost issue in Dodd-Frank Act regulations on OTC derivative trading. “If you don’t have to clear your position … you don’t have to worry about the margin and capital requirements” which historically have not applied to hedge transactions, she said. Ms. Kramer warned that “it’s going to cost a lot of money to become a swap dealer or major swap participant” should clearing of hedge transactions be required. If hedge funds are put into these categories, she concluded, “We’re going to see a significant contraction in the leverage available” because the cost of trading will rise for the funds.