Sum of Swap Rules May Hurt Trade

Proposed rules seen boosting costs; Morgan Stanley exec cites ‘multiplier effect’

Proposed rules to increase transparency in the $708 trillion private derivatives market may combine for an amplified effect that boosts costs for users, according to industry executives.

Trading in interest-rate, credit-default and other swaps may decrease if several changes are taken together, James Hill, a managing director at Morgan Stanley, said today at the annual conference of the International Swaps and Derivatives Association in Chicago.

'Knock-on Effects'

“The cold-turkey effect can be quite large,” said De Leon, who is also an ISDA board member. “As you add them up, the unknowns are quite large and the potential knock-on effects are larger than we’d hoped.”

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