Wall Street’s Control Over Derivative Exchanges

The financial reform bill seeks to curb Wall Street’s taste for derivatives by moving most swap trading to regulated clearinghouses. Yet a provision quietly dropped from the legislation last week could cement big banks’ control over the very exchanges that are intended to make the capital markets safer.

Under pressure from the financial industry, lawmakers cut an amendment that would have limited banks’ ownership in the clearinghouses to 20 percent. Instead, regulators can set the threshold — or not (a real possibility, given federal watchdogs’ deference to Big Finance in recent years).

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