Geithner: tighten up derivatives trading…
US TREASURY Secretary Timothy Geithner said yesterday there was a good case to let some firms use derivatives with little scrutiny for business purposes, but that most trading should face stiffer rules.
Geithner also urged lawmakers to let regulators block companies from customising derivatives contracts to avoid trading on central clearing houses as a way to evade the view of regulators.
He told the Senate Agriculture Committee that it was “imperative” regulators get powers to proactively require central clearing of any derivative types whether or not they are currently accepted for clearing.
“We… should require that regulators carefully police any attempts by market participants to use spurious customisation to avoid central clearing,” Geithner said.
Subjecting derivatives to more supervision is a key element of the Obama administration’s bid to overhaul financial regulation. But many firms are worried that reform could make it harder for them to hedge.