(Reuters) — CME Group Inc. CEO Craig Donohue defended high-frequency traders on Wednesday, saying that, on the whole, they helped markets, but he acknowledged some of the more disruptive trading practices should be curbed.
The U.S. Securities and Exchange Commission said earlier this month it will take new steps to make markets more stable, focusing in on computer-driven trading that may contribute to big market swings.
High frequency traders are not "deleterious" to markets, Donohue said at a Bank of America Merrill Lynch financial services conference on Wednesday. As regulators learn more about how such traders operate, they will likely scale back plans to crack down and will ultimately propose only modest changes to current practices, Donohue forecast.
Donohue also said the giant exchange operator has an early lead in clearing over-the-counter derivatives, with $925 million in rate swaps already on CME's books since the Oct. 18 launch of its clearing service.
Congress recently passed Wall Street reform legislation that mandates clearing of most OTC derivatives, creating a potentially lucrative business that will be an important battleground for clearinghouses globally in coming years.
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