CFTC’s O’Malia Says Swap Rules Will Fail Without Transparency

U.S. derivatives rules being crafted under the Dodd-Frank Act will fail if they let buyers and sellers trade in markets without price transparency, Commodity Futures Trading Commission member Scott O’Malia said.

“I will not view the commissions’ efforts as a success if we create a market structure that fractures liquidity and creates an incentive to utilize dark pools, simply because our rules do not provide the flexibility necessary to facilitate on-exchange transactions,” O’Malia said today in remarks prepared for a meeting on swap execution facilities. Dark pools are private venues that allow stock trades without publicly displaying bids and offers.