Fed hints at more regulation for OTC derivatives market

05/6/2009 | Bloomberg

Because the unregulated $684 trillion over-the-counter derivatives market contributed to the troubles of Bear Stearns, Lehman Bros. and American International Group, the Federal Reserve indicated that it would overhaul regulation of the market. Also, Theo Lubke, an official at the Federal Reserve Bank of New York who is responsible for the market's oversight, said trading of the derivatives contracts should not be dominated by the largest banks. "It is simply unacceptable in today's environment that the design and structure of the OTC derivatives market can be controlled by a handful of large dealers," Lubke said recently.

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