CFTC trade rules will create 'winner's curse'

Mark Pengelly
15 Feb 2011

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Rules proposed by the US Commodity Futures Commission (CFTC) on large trades could create a 'winner’s curse', harming liquidity in the market for interest rate derivatives, according to analysts at Barclays Capital.

In a report dated February 10, the bank's interest rate analysts say rules on so-called block trades would create extra risks for dealers, causing spreads on these trades to widen.

Dealers and buy-side market participants have argued the rules will damage liquidity in the market – an

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