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CFTC calls for cap on stakes in clearing houses and exchanges

01 October 2010  |  6381 views  |  0 Washington, capitol hill

The US Commodity Futures Trading Commission (CFTC) is calling for caps on the ownership stakes members can hold in clearing houses, exchanges and trading systems.

The CFTC is proposing a 20% ownership limit for member banks and major swaps dealers in a bid to ensure they do not hold undue influence on the clearing houses and trading platforms they use, preventing conflicts of interest.

In addition, banks and swap dealers and major participants would not be allowed to collectively own more than 40% of a clearinghouse, under the rules presented today in Washington to improve oversight of the $615 trillion OTC market.

The CFTC is now accepting public comments for at least 30 days before finalising rules by January, with firms given another two years to comply.

The rules would be a blow to London-based LCH.Clearnet, which is looking to move into the US OTC derivatives market but is more than 80% owned by banks and swaps dealers.

Meanwhile, a joint CFTC-SEC report into the 6 May "flash crash" expected to be released later today, will conclude that a single trade by asset management firm Waddell & Reed Financial helped trigger a rash of selling, according to Reuters.

Citing a source, Reuters says Waddell, which sold a large order of e-mini futures contracts during the crash, will not be named in the report.

Report to say Waddell stoked flash crash: source - Reuters

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