Bloomberg LP received bad news because of the US court dismissal of a complaint filed by the firm against a US derivatives regulator. The case stems from a data vendor's complaint that a new rule on trading swaps would hurt the company's business.
Bloomberg is but one of the many providers that utilize a platform where one can do trade swaps while regulators from all across the globe pull the plug on the US$630 trillon or GBP405 trillion market to avoid the recurrence of the financial crisis of 2008.
This move though would be effectively be impaired when the Commodity Futures Trading Commission issued a new rule forcing buyers and seller of swaps to provide margins to soften the blow should the deal fall apart. This was claimed by Bloomberg in documents filed in court.
Bloomberg added that the margin on a swap must be able to cover a five day value to unwind the position. On the other hand, the CFTC rule would only require a one day margin for futures, even for a similar product traded in other echanges, making it cheaper for its users and losses for the swap platform operators.
According to the court's ruling, "Bloomberg simply assume(s) the worst case scenario... without grounding their assumption in the actual behavior."
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