As the banking industry and Wall Street gear up for the impending reforms under Dodd-Frank, it is wise to cast an eye toward the rules for trade reporting and clearing for over-the-counter derivatives, lest they catch you unaware.
The new rules, which will take effect Oct. 16, are intended to help the industry assess and mitigate risk by creating transparency in the OTC derivatives market. However, they present a few challenges, as firms will be obligated to exchange data with trade repositories in a timely manner, raising issues of cost-effectiveness, efficiency and standardization of data transmitted. Like most of the new regulations under Dodd-Frank, this trade reporting and clearing is subject to strict deadlines.
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