The Great Debate UK
The Obama administration formally sent its plan for regulating derivatives to Capitol Hill today. And to no one's surprise, the key proposal in the 115-bill is a plan to regulate "standard'' derivatives on regulated exchanges of clearinghouses.
As I've pointed out a number of times, Team Obama has yet to come-up with a workable definition for a standard derivative. The administration seems content to kick the issue down the road.
The bill would leave it up to the discretion of the CFTC and SEC to develop a definition of a standard derivative. The agencies have up to 180 days after the law is enacted to formulate a definition.
Team Obama says the definition should be as broad as possible and says regulators should consider things like trading volume in specific transactions and whether agreements have similar terminology. Also, in a bit of circular sounding reasoning, the bill says: