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Non-banks notch win in long-running derivatives battle 

April 10, 2014
Lauren Tara Lacapra, Reuters

A group of small brokerages and large commodities companies have convinced lawmakers to tweak a rule they say would have made derivatives trading more expensive for them and sent more business to Wall Street banks that already dominate the market.

Companies including INTL FCStone Inc, Nomura Holdings Inc, Cargill Inc and Royal Dutch Shell Plc lobbied a congressional committee to change a rule proposed by the U.S.Commodities Futures Trading Commission (CFTC) on how much capital they must hold against derivatives trades as dealers, people familiar with the matter told Reuters. Cargill and Shell have derivatives trading arms.

Under proposed CFTC rules, these companies would be required to hold more capital against certain derivatives trades - also known as "swaps" trades - than banks. That is because the CFTC rules, created as part of the 2010 Dodd-Frank financial reform law, allow banks to calculate capital needs using their own proprietary models but force non-bank swaps dealers to use standardized models.

Read more: Reuters

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