The Impact of Trade Reporting on the Interest Rate Derivatives Market

Fleming, Michael J.; Jackson, John; Li, Ada; Sarkar, Asani; Zobel, Patricia

Discussion Paper

The Impact of Trade Reporting on the Interest Rate Derivatives Market

Abstract: In recent years, regulators in the United States and abroad have begun to strengthen regulations governing over-the-counter (OTC) derivatives trading, driven by concerns over the decentralized and opaque nature of current trading practices. For example, the Dodd-Frank Act will require U.S.-based market participants to publicly report details of their interest rate derivatives (IRD) trades shortly after those transactions have been executed. Based on an analysis of new and detailed data on the trading activity of major dealers, this post discusses the possible costs and benefits of reporting requirements on the IRD market. In a previous post, we examined the same question for the credit default swap (CDS) market.

Keywords: hedging; Interest rate derivatives; transactions; large trades; transparency; standardization; Dodd Frank Act;

JEL Classification: G1;