RIP OTC: Swap futures gaining buy-side fans

New regulations could make interest rate swaps a more expensive product. As a result, large buy-side firms are looking at alternatives such as swap futures, which are also getting the backing of some dealers. Is this the beginning of the end for over-the-counter swaps? By Matt Cameron

“I felt like the little boy shouting the emperor had no clothes,” says Don Wilson, founder and chief executive of DRW Trading in Chicago, recalling a conversation he had with an irate congressional staffer when the Dodd-Frank Act was still in its infancy. “I asked her: ‘What do you think the difference is between a swap and a future?’, and she got really angry, calling it a stupid question, and saying everybody knows swaps are more risky. And I said: ‘With all due respect, they are very similar