Question-and-Answer Session
Operator
(Operator instructions) Our first question comes from Roger Freeman with Barclays Capital.
Roger Freeman - Barclays Capital
Hi, good morning. I guess few questions here. All right, I guess only two. But maybe on the interest rate swap opportunity, if you look at how that product has evolved over time, can you help us think about that a bit because I guess my understanding is it started out more as a futures contract, has evolved to a cleared swap contract, and why that might be significant for users?
Rick Redding
Roger, this is Rick. You are absolutely right. We got into the marketplace and really started talking to both buy and the sell-side and trying to figure out what their needs were. One of the things that became evident to us is that product needs to be cleared more as an OTC product rather than as a futures contract.
And that for a lot of reasons for the risk is very different than what a traditional futures contract is. So a lot of the efforts that we have been undertaking on the clearance side is to really look at these as OTC contracts, and we think that is the right way, and we think that is the way both the buy and sell-side want to clear these products.
Roger Freeman - Barclays Capital
Okay, great, and then I guess my second question would be OTC-related, since your Investor Day, I think one thing that has popped out in all of the regulatory rhetoric is again for now suggesting that hedge exemptions for dealers should be eliminated for non-commercial swap transactions, and I'm just wondering from your perspective, how do you think if that happens in taking the deterioration of the market fall that will likely create. How do you think that would impact volumes for you if financial counterparties like hedge funds and buy-side (inaudible) effectively couldn’t do credit swap with the Street, do you think that volume would just come directly to you in futures volumes?
Craig Donohue
It is Craig. Let me make a couple of comments on that. I think first of all I think that's not likely to affect the end-user, the end-user would likely distribute its business across a larger number of swap dealers in order to deal with that potential restraints that would be imposed, but I think maybe more fundamentally I think it's important to say that you know, there is no outcome yet on that topic and there is a diversity of views on that topic.
- To read the full transcript on Seeking Alpha, click here »
