Exchanges should benefit from active legislation

Although Wall Street profits may suffer, futures exchanges likely will reap rewards of legislation currently active in the U.S. Senate, according to recent reports.

While proponents of the bills say the new restrictions are necessary to rein in excess risk in a largely unregulated market, firms that operate in the multi-trillion-dollar OTC derivatives market are concerned how a new landscape could affect profits.

One Senate bill introduced by Banking Committee Chairman Christopher J. Dodd (D-Conn.) would require exchange trading for standardized swaps. In legislation introduced by Sen. Blanche Lincoln (D-Ark.) this week, banks would likely have to spin off their OTC derivatives trading activities from traditional banking operations.

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