Friday, August 13, 2010

How will Dodd-Frank impact GS??

Staying on the same topic of regulation, I read an insightful article in Forbes that explained why Goldman Sachs stands to benefit from the regulation.  With regard to derivative trading being moved onto exchanges in order to increase transparency, the article notes that:

But Goldman is welcoming the shift to the exchanges, because in a business where profits come from volume and speed of execution, Goldman tends to win. It proved that in foreign exchange, where until the early 1990s transactions were conducted mostly by facsimile machine and phone. As the action shifted to computers, bid-ask spreads narrowed, but transaction volume surged. Total North American forex volumes doubled between 2004 and 2010 to $754 billion a day, according to the New York Fed.

No comments:

Post a Comment