WASHINGTON, March 16 (Reuters) – The path to government regulation of the $450 trillion market in over-the-counter derivatives must wind through the U.S. Senate Agriculture Committee, which oversees futures markets.
The journey began in the House of Representatives in December with the passage of a bill that would bring OTC derivatives under government regulation for the first time.
The Senate Banking Committee is also involved. A bill unveiled on Monday by its chairman calls for new rules for the market, which is dominated by a handful of Wall Street firms, including Goldman Sachs and JPMorgan Chase.
The Obama administration and most congressional Democrats favor an OTC derivatives crackdown, with many Republicans on board as well. But Wall Street lobbyists keen to protect the substantial profits produced by derivatives trading are pushing to write loopholes and exemptions into the new regulations.
There is wide consensus among lawmakers to require mandatory clearing and exchange trading of standardized derivatives. Trading of customized swaps would be reported, with the expectation of higher margin and capital requirements.