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The new rule comes as financial regulation takes center stage in Washington. President Obama called on Tuesday for more “cops on the beat” to monitor speculative commodities trading, which some experts blame for rising gas prices. In a speech in the White House Rose Garden, Mr. Obama invoked the Enron scandal, in which the energy firm amassed a major derivatives trading operation and skirted the law amid lax rules.
In the new rule set to be completed on Wednesday, the controversy lies in the so-called de minimis exemption, a sort of regulatory hall pass for firms that have insignificant derivatives holdings. At $8 billion, Mr. Kelleher said it amounts to a de maximum exemption.
The initial $100 million limit met harsh criticism from most derivatives players, who argued that a single swaps trade can carry a notional value of billions of dollars. The notional amount reflects the value of the underlying assets rather than the amount of money that changes hands. So, on the face of it, even the $8 billion level would be a blip for a market that is valued at $700 trillion.
But the regulatory fine print could allow many firms to whittle down the size of their activity to under $8 billion.
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