December 20, 2010

Nasdaq OMX Group is quietly working the back channels of the nation's capital to limit banks' "cartel-like control" of clearinghouses as Wall Street braces for final word on how the $600 trillion swaps market will function.

Part of the exchange operator's rationale is that if its own clearinghouse is to thrive in the long run, it'll need to keep banks as customers, according to Bloomberg News. So in order to do so, Nasdaq OMX has been quietly lobbying Congress and the Commodity Futures Trading Commission.

The firm even went as far as to hire the ex-chairman of the House Financial Services Committee to lobby former colleagues, Bloomberg reports.

From Bloomberg:

"Unions and investor advocates say that banks' near-monopoly has driven the prices of derivatives higher for everybody. More transparency in those markets will lower the costs for all companies buying derivatives, which in turn will bring down the costs not only of financial products but consumer goods based on agricultural or energy commodities - everything from loaves of bread to gallons of heating oil or gasoline.

"What the progressives are concerned about here is the ongoing control of clearinghouses by institutions that are making money by keeping things opaque," said Heather Slavkin, a lobbyist for the AFL-CIO.

Nasdaq lost the first round of the regulatory battle this year when Congress decided not to set caps on clearinghouse ownership, passing the decision on to regulators - the CFTC as well as the Securities and Exchange Commission."

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced ...