Surprise! New Derivatives Regulations Will End Up Helping Goldman

Just in case you thought new regulations actually hurt entrenched industry players, here’s some reality for you.

Reuters: “Standardized central clearing of OTC derivatives are likely to force a major electronification of derivatives trading, which may play to Goldman’s (GS) advantage given their existing technology platform and expertise in high volume electronic trading,” Citigroup analyst Keith Horowitz said.

Horowitz, who recently met with Goldman’s Chief Financial Officer David Viniar, said the new rules, which could set mandatory minimum collateral and margin requirements, if enacted are expected to benefit the bank relative to its peers.

Goldman has historically had among the most stringent collateral and margin terms versus more generous peers, who too often cut deals with easy credit terms to win business, said Horowitz, who also met Goldman’s Chief Operating Officer Gary Cohn and investment banking head David Solomon.

This really can’t be a shock in any way. This is what regulations do — they favour the strong and connected at the expense of upstarts and outsiders.

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