Regulations proposed for credit derivatives

The essence of the new credit derivative regulation proposed by the Obama Administration is hardly surprising. The details will be important. Forcing trades to a clearinghouse is one thing; that movement has begun already, albeit slowly. (The ICE would appear to have the early lead.) Forcing trades to an exchange is something else entirely and we'll need to see the details. 

All in all, it makes sense to force trades into the open and ask for capital to back them up. But you have to wonder if the administration is giving the industry an out: By not requiring the same rules for custom contracts is it leaving a loophole that can be exploited? On one hand, the industry--witness to the recent Big Bang in the CDS market--is moving toward standardized contracts. But that movement is inchoate. At this point, the world needs more specifics. 

For more:
- here's a New York Times article

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