Banks May Face ‘Pay-to-Play’ Ban in Muni-Swaps Market
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Banks that arrange derivative trades with U.S. states, municipalities and public pensions may be barred from giving to the campaigns of politicians who hold the power to award them work.
The U.S. Commodity Futures Trading Commission voted 5-0 today to seek public comment on a proposed ban, one of the first regulations aimed at the municipal-derivatives business arising out of the Dodd-Frank financial overhaul law. The rule also would bar banks from trading with officials unable to gauge the risks involved, and from peddling deals that aren’t in a client’s best interest.