It's looking more and more like the OTC derivatives clearing provisions of the now-passed Dodd-Frank law will be a big win for the major dealers. They own the main clearinghouse after all, and they loom as big players in the second largest clearing facility.

Goldman Sachs (NYSE: GS) has responded as well by announcing it is expanding its clearing operation, folding OTC clearing across all major asset classes into its existing futures clearing and prime brokerage platform. So it will now be able to add CDS clearing on an agency basis to its list of services. A large number of current customers will likely find it attractive.

Smaller broker dealers have similar ideas for expansion, notes Dow Jones. But some of these firms wonder whether the main clearing facilities are favoring the big boys. One might argue that allowing smaller dealers into the mix would be tantamount to lowering standards. But you can bet it won't stop more broker dealers from entering the business. They pretty much have to. Regulatory agencies have until next July to publish the final rules for central clearing and firms will have another 60 days to comply.

For more:
- here's some background from the AP

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