End-users debunk CFTC head's claim that OTC deals need to be exchange-traded

摘要

Although the head of the Commodity Futures Trading Commission last week argued that Wall Street - not physical hedgers - is the only side that wins by keeping over-the-counter deals off transparent, exchange-traded markets, energy end-users continued to have reservations.rn"When Wall Street banks enter into derivatives transactions with their customers, they know how much their last customer paid for the same deal, but that information is not made publicly available," CFTC Chairman Gary Gensler said last week at a conference of the Consumer Federation of America. "They benefit from internalizing this information."rnGensler explained that OTC derivatives transactions essentially offer two components: a credit extension and a risk-mitigation component. And he said many end-users - a term used in the OTC debate to describe physical hedgers such as energy producers and distributors - "don't have an appreciation" of the true costs involved in the credit extension, given this lack of transparency.