Wednesday, November 24, 2010

Regulators Push for More Transparency on Dimly Lit Corners of the Financial World

Until now the hedge funds, derivatives, and private equity have been highly unregulated, but now the CFTC and the SEC have stepped in by implementing hundreds of new regulations which were passed by Congress back in July as mentioned in this article in Reuters. A big focus of the proposed rules target are derivatives include credit default swaps, which as we all can remember aided in the downfall of AIG and Lehman Brothers.

Scott O'Malia, a Republican CFTC commissioner mentions "This proposal merely repeats the vague statutory direction provided in the Dodd-Frank Act." The proposal calls for real time reporting of swap trades and record keeping. Aside from swap trades, the SEC also proposed that hedge funds over $150 million be registered with the investor protection agency to root out any fraud and abuse. Time will only tell how these immediate changes will pan out in the financial world.

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