Since the Global Crisis, a key ingredient of reforms has been to force over-the-counter contracts to be traded in more transparent exchange-like settings. The aim has been to reduce the cost of trading such instruments and make markets more resilient. This column analyses the impact of the Dodd-Frank Act in the US on the market for vanilla interest rate swaps. The introduction of swap execution facilities trading is associated with a significant improvement in swap market liquidity. This suggests that Europe may see similar benefits from centralising swap trading, though it remains to be seen how these markets will operate in more volatile times.
Evangelos Benos, Richard Payne, Michalis Vasios, 25 February 2016
Takeo Hoshi, 23 December 2012
Rejigging financial regulation is in vogue. But, in the world of international finance, how well do different regulatory systems join up? This column argues that the US Dodd Frank Act and Basel III are, in part, incompatible and that harmonising them may lead to unintended consequences. The US ought to tread carefully here but should also try hard to maintain the spirit of better financial regulation.
Priya Nandita Pooran, 14 November 2010
Will the US Dodd-Frank Act work? This column argues that unless institutional oversight shifts from the current fragmented structure to a federal one, the Dodd-Frank reforms could be prevented from having any significant positive effect on the surveillance of the financial system.
Viral Acharya, Thomas F Cooley, Matthew Richardson, Richard Sylla, Ingo Walter, 24 November 2010
Of the recent reforms to make financial systems more robust, the US Dodd-Frank Wall Street Reform and Consumer Protection Act stands out. Despite being broadly in favour of its proposals, this column identifies flaws in its design that fail to deal with the main causes of the crisis and that will lead to further implicit government guarantees.