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Showing posts from October, 2010

SEC proposes caps on trading venue stakes

WASHINGTON (AP) -- Federal regulators on Wednesday proposed to cap the stake that banks and other market players can own in exchanges where the complex investments blamed for hastening the financial crisis are traded.

The Securities and Exchange Commission voted to seek public comment on the proposed rules, which are designed to prevent conflicts of interest in the operations of clearinghouses and exchanges for derivatives.

The rules were proposed under the new financial overhaul law enacted this summer. It calls for new oversight of derivatives, traded in an opaque $600 trillion market worldwide.

Under the proposal, firms that trade derivatives wouldn't be able to own more than 20 percent of the clearinghouses, exchanges and other trading venues.

The value of derivatives hinges on an underlying investment or commodity -- such as currency rates, oil futures or interest rates. The derivative is designed to reduce the risk of loss from the underlying asset.

The SEC proposal applies…