Swaps Experts Say Market Will Grow; Others Differ in Opinion

As the swaps market braces for Dodd-Frank impact, firms and investors differ on the anticipated changes in the newly regulated market.

Citigroup, Inc. recently released a white paper predicting that interest rate and credit default swaps will grow more than 10% by 2013 as trading risk will decrease and price transparency will increase under Dodd-Frank. Citigroup also stated that Clearinghouse increased requirements for margin will likely cause market participants to avoid marginally profitable investments. They estimate that 60% of OTC derivatives market by volume will soon be centrally cleared.