Another think that might befall the "rapists".

It seems likely that the G7 finance ministers will propose that derivatives will have to be traded on exchanges (e.g. instead of OTC) if their asset values are to be allowed as counting towards liquidity ratios in regulated financial outfits (IBs will also be required to conform with ratios similar to or even tougher than commercial banks).

Trading of derivatives on exchanges will make it easy and cheap to collect a tax (aka stamp duty). Derivatives trading in NY pre credit crunch was valued at >$500bn / day but I guess it has gone down a little lately:-)

Two points on your suggestion, which I like very much:

1. A tax on trades made on an exchange is indeed a good idea, because an exchange -- of any kind -- is the recipient of the protection of law from the various governments involved, not to mention police protection of its facilities as well as oversight by regulatory bodies The SEC takes a few pennies from every stock sale I make, why should derviatives be any different? I make no suggestion as to how this tax should be levied, but the SEC fee is surely a reasonable precedent.

2. Having said that, BY FAR the more important aspect of forcing such trades onto an exchange is that they would establish a market price for them. A major factor in the current crisis is the fact that institutions held derivatives on their books at prices which had no relationship to market reality. Traded only rarely, as they were, they were "worth" whatever various accounting agencies and the institutions who bought them said they were. When conditions changed and they were FORCED onto the marketplace, they proved to be worth substantially less than their putative value. An exchange would make a dent in this by giving at least SOME indication to buyers and sellers of what the stuff was worth.

And it's not a hard thing to sell to the public, either. Simply point out that what an exchange enables is a MARKET, which is what those who looted the public with phony derivatives claim to genuflect before. Do markets work, as the anti-regulators say they do? Then what's the problem?