Derivatives overhaul would cut into profitable market for banks:

08/12/2009 | Bloomberg

If the Obama administration's proposal for revamping the derivatives market is approved, hedge funds, JPMorgan Chase, Goldman Sachs and other banks will see pressure on their bottom line. The sweeping plan encourages derivatives users to use standardized derivatives rather than customized contracts, which would have increased capital and margin requirements. "The big broker-dealers make a lot of money trading these customized derivatives," said Paul Miller, a banking analyst at FBR Capital Markets.

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