An Attractive Option Due to Dodd-Frank
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) has introduced major legal, operational, and regulatory challenges associated with continuing to trade swaps. With the second phase of the Commodity Futures Trading Commission's (CFTC's) implementation of Title VII of Dodd-Frank with regards to swaps clearing just having ensnared the next round of market participants (Category 2) as of June 10, 2013, we examine how investors could use Treasury note futures contracts to replace over-the-counter interest rate swap (OTC IRS) positions while achieving a similar interest rate risk exposure.
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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
