Some market participants say the conversion of swaps to futures could lead to problems. "As the market gravitates to the cheaper platform -- and it's cheaper because it's unsafe -- that creates risk for everyone," says James Cawley, CEO of Javelin Capital Markets. However, others say that swaps continue to provide the best way to manage many exposures, so they will not be completely replaced by futures. "There's obviously a reason the rates swap market emerged -- it allows very specific contract terms. We don't see the futures market replacing that," said James Wallin of Alliance Bernstein.
Published in Brief: