Banks, asset managers and energy companies are imploring regulators to go easy in writing new capital and margin requirements for derivatives trading, escalating the debate about some of the thorniest provisions in the Dodd-Frank Wall Street overhaul legislation.
The capital and margin rules are “as challenging as any that we’re going to need to grapple with,” said John Ramsay, a deputy director for the Securities and Exchange Commission, which will write the new rules along with the Commodities Futures Trading Commission. Banking regulators, including the Federal Reserve and the Federal Deposit Insurance Corporation, also will have a hand in crafting the rules.
At a gathering in Washington on Friday, Mr. Ramsay and other regulators met with executives from Shell, Chesapeake Energy and smaller energy companies that frequently use derivatives to mitigate risk. The companies typically use swaps, a common type of unregulated derivative.
While Morgan Stanley, Goldman Sachs and TIAA-CREF also attended the meeting, the loudest pleas came from the energy companies.
Their simple message for regulators? Just trust us. Some companies said that they already posted margin, or collateral, whenever they executed an unregulated swaps deal.