The world's top brokers face a fight to hold onto hundreds of millions of dollars of revenue this year when U.S. legislation throws open the vast swaps trading market to stock exchanges. Brokers such as ICAP and BGC Partners make around a third of their revenue from the $640 trillion industry for trading swaps - financial instruments used by companies to cover their exposure to changes in interest rates, foreign exchange rates and credit ratings.
Exchanges such as CME Group, NYSE Euronext and the IntercontinentalExchange, meanwhile, dominate the much smaller market for futures, which give similar protection, but are more standardised and so tend not to offer exact cover.
However, new U.S. swap rules enshrined in the Dodd-Frank act, due to be finalised in the coming weeks and take effect in the middle of this year, could drive business to the exchanges and away from the brokers, and reshape the industry globally due to the size of U.S. markets and the power of their regulators.
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