Posted on 03/03/2010 7:17:01 AM PST by TigerLikesRooster
Lynch amendment spooks DTCC
Author: Duncan Wood
Source: Risk magazine | 03 Mar 2010
As dealers and legislators feud over reform of the over-the-counter derivatives market, at least one innocent bystander – New York-based post-trade utility the Depository Trust & Clearing Corporation (DTCC) – has been caught in the crossfire. At the end of February, DTCC staff travelled to Washington, DC to voice their concerns.
It's a real pain for them. It's one thing having a go at banks but the consequence of this amendment is that it's now sweeping up a utility as well
At issue is an amendment offered by Massachusetts congressman Stephen Lynch on December 9, which was included in the House version of reform when it passed two days later. The rule would prevent dealers from collectively owning more than 20% of any derivatives clearing house – an attempt to stop the industry hampering progress towards greater use of clearing and a swipe at dealer-backed ventures such as IntercontinentalExchange's Ice Trust and Ice Clear Europe. But it could also catch the DTCC, which regularly shakes up its ownership based on how much members use its services – if one of these periodic reviews resulted in more than a fifth of the DTCC's shares being in the hands of dealers, the consequences could be dire.
"It is impossible to know what would happen," says a clearing industry insider. "DTCC shares are not publicly traded so it might theoretically mean it has to go public, and then completely rebalance the ownership. But the DTCC is also a monopoly, which is only tolerated because it is a user-owned utility, so going public would leave it subject to the usual antitrust laws. To say it is a catch-22 would be an understatement......
(Excerpt) Read more at risk.net ...
P!
The DTCC is one of the most secretive bodies on Earth. Just about everything goes through them, want to know who pulled off that 500 Billion$ drain out of the monetary system back in Sept of 09? Yea, DTCC would be able to find out I think.
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