Author: United States. Congress. House. Committee on Financial ServicesPublisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 224
Book Description
Reform of the Over-the-counter Derivative Market
Author: United States. Congress. House. Committee on Financial ServicesPublisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 224
Book Description
Comparing G-20 Reform of the Over-The-Counter Derivatives Markets
Author: James K. JacksonPublisher: Createspace Independent Pub
ISBN: 9781482762143
Category : Political Science
Languages : en
Pages : 58
Book Description
Derivatives, or financial instruments whose value is based on an underlying asset, played a key role in the financial crisis of 2008-2009. Congress directly addressed the governance of the derivatives markets through the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank; P.L. 111-203; July 21, 2010). This Act, in Title VII, sought to bring the largely unregulated over-the-counter (OTC) derivatives markets under greater regulatory control and scrutiny. Pillars of this approach included mandating that certain OTC derivatives be subject to central clearing, such as through a clearinghouse, which involves posting margin to cover potential losses; greater transparency through trading on exchanges or exchange-like facilities; and reporting trades to a repository, among other reforms. In the debates over Dodd-Frank and in subsequent years, many in Congress have raised the following important questions: If the United States takes stronger regulatory action than other countries, will business in these OTC derivatives markets shift overseas? Since OTC derivatives markets are global in nature, could derivatives trading across borders, or business for U.S. financial firms that engage in these trades, be disrupted if other countries do not adopt similar regulatory frameworks? The first step in addressing these congressional concerns is to examine the degree to which other major countries have adopted similar legislation and regulation as the United States, particularly in light of commitments from the Group of Twenty nations (G-20) to adopt certain derivatives reforms. Following the financial crisis, G-20 leaders (generally political heads of state) established a reform agenda and priorities within that agenda for regulating and overseeing OTC derivatives. The G-20 as an organization has no enforcement capabilities, but relies on the members themselves to implement reforms. According to recent surveys, most members are making progress in meeting the self-imposed goal of implementing major reforms in derivatives markets. Only the United States appears to have met all the reforms endorsed by the G-20 members within the desired timeframe of year-end 2012. The European Union (EU), Japan, Hong Kong, and the United States have each taken significant steps towards implementing legislation requiring central clearing. However, in most of these jurisdictions legislation has not yet been followed up with technical implementing regulations for the requirements to become effective, according to the Financial Stability Board (FSB), which conducts the surveys. Most authorities surveyed estimated that a significant proportion of interest rate derivatives would be centrally cleared by year-end 2012, but they were less confident of progress for other asset classes. The EU appeared to be making progress in its G-20 derivatives regulatory commitments, particularly in central clearing and trade repository-reporting requirements, but at a slower pace than the United States, according to the FSB. This may be due in part to the need for legislation to be passed by individual national legislatures even when agreed broadly by the EU. As of October 2012, however, only the United States had adopted legislation requiring standardized derivatives to be traded on exchanges and electronic platforms. This report examines the G-20 recommendations for reforming OTC derivatives markets and presents the result of self-assessment surveys measuring the performance of G-20 members and some FSB members to date in meeting their commitments. The Appendix to the report presents more detailed information on the status of individual jurisdictions in implementing the G-20- endorsed reforms. The Glossary defines key international bodies and related financial terms and concepts.
Reform of Over-the-counter Derivatives Markets
Author: Nikolas GavinoPublisher: Nova Science Publishers
ISBN: 9781633214262
Category : Derivative securities
Languages : en
Pages : 0
Book Description
Derivatives, or financial instruments whose value is based on an underlying asset, played a key role in the financial crisis of 2008-2009. Congress directly addressed the governance of the derivatives markets through the Dodd-Frank Wall Street Reform and Consumer Protection Act. This Act, in Title VII, sought to bring the largely unregulated over-the-counter (OTC) derivatives markets under greater regulatory control and scrutiny. Pillars of this approach included mandating that certain OTC derivatives be subject to central clearing, such as through a clearinghouse, which involves posting margin to cover potential losses; greater transparency through trading on exchanges or exchange-like facilities; and reporting trades to a repository, among other reforms. This book examines the G-20 recommendations for reforming OTC derivatives markets and presents the result of self-assessment surveys measuring the performance of G-20 members and some FSB members to date in meeting their commitments. It also discusses the key issues in derivatives reform; describes some of the requirements placed on the derivatives market by the Dodd-Frank Act; analyses why countries coordinate economic policies and the historical origins of the G-20; how the G-20 operates; major highlights from previous G-20 summits, plus an overview of the agenda for the next G-20 summit; and debates about the effectiveness of the G-20 as a forum for economic cooperation and co-ordination.
Discriminatory Pricing of Over-the-Counter Derivatives
Author: Hau HaraldPublisher: International Monetary Fund
ISBN: 1498303773
Category : Business & Economics
Languages : en
Pages : 45
Book Description
New regulatory data reveal extensive price discrimination against non-financial clients in the FX derivatives market. The client at the 90th percentile pays an effective spread of 0.5%, while the bottom quarter incur transaction costs of less than 0.02%. Consistent with models of search frictions in over-the-counter markets, dealers charge higher spreads to less sophisticated clients. However, price discrimination is eliminated when clients trade through multi-dealer request-for-quote platforms. We also document that dealers extract rents from captive clients and market opacity, but only for contracts negotiated bilaterally with unsophisticated clients.
Regulatory Reform and the Derivatives Market
Author: United States. Congress. Senate. Committee on Agriculture, Nutrition, and ForestryPublisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 196
Book Description
Recommendations for Central Counterparties
Author: Group of Ten. Committee on Payment and Settlement SystemsPublisher:
ISBN:
Category : Clearing of securities
Languages : en
Pages : 80
Book Description
Shaping Reforms and Business Models for the OTC Derivatives Market: Quo vadis?
Author: OTC Derivatives: Bilateral Trading and Central Clearing
Author: David MurphyPublisher: Palgrave Macmillan
ISBN: 9781349451371
Category : Business & Economics
Languages : en
Pages : 298
Book Description
After the credit crisis, supervisors enacted a range of financial reforms. In particular, they radically changed the nature of the OTC derivatives market via a number of measures, notably mandatory central clearing. This book discusses the market before the crisis, explains what central clearing is, and outlines the consequences of the new rules.
The Post-Reform Guide to Derivatives and Futures
Author: Gordon F. PeeryPublisher: John Wiley & Sons
ISBN: 1118205421
Category : Business & Economics
Languages : en
Pages : 348
Book Description
An in-depth look at the best ways to navigate the post-reform world of derivatives and futures The derivatives market is one of the largest, and most important financial markets in the world. It's also one of the least understood. Today we are witnessing the unprecedented reform and reshaping of this market, and along with these events, the entire life cycle of a derivatives transaction has been affected. Accordingly, nearly all market participants in the modern economy need to view the handling of risk by derivatives in a very different way. Many aspects of financial services reform are based on a belief that derivatives caused the Great Recession of 2008. While the difficulties we now face cannot be blamed solely on derivatives, the need to understand this market, and the financial products that trade within it, has never been greater. The Post-Reform Guide to Derivatives and Futures provides straightforward descriptions of these important investment products, the market in which they trade, and the law that now, after July 16, 2011, governs their use in America and creates challenges for investors throughout the world. Author Gordon Peery is an attorney who works exclusively in the derivatives markets and specializes in derivatives and futures reform and market structure. Since representing clients in Congressional hearings involving Enron Corp., he has developed extensive experience in this field. With this guide, he reveals how derivatives law, and market practice throughout the world, began to change in historic ways beginning in 2011, and what you must do to keep up with these changes. Explains what derivatives and futures are, who trades them, and what must be done to manage risk in the post reform world Accurately reflects the futures and derivatives markets as they exist today and how they will be transformed by the Dodd-Frank Wall Street Reform and Consumer Protection Act Highlights the risks and common disputes regarding derivatives and futures, and offers recommendations for best practices in light of the evolving law governing derivatives The financial crisis has changed the rules of Wall Street, especially when it comes to derivatives and futures. The Post-Reform Guide to Derivatives and Futures will help you navigate this evolving field and put you in a better position to make the most informed decisions within it.
The Derivatives Revolution
Author: Raffaele ScalcionePublisher: Kluwer Law International B.V.
ISBN: 9041134301
Category : Law
Languages : en
Pages : 458
Book Description
It is now widely recognized that an uncontrolled "derivatives revolution" triggered one of the most spectacular worst-case scenarios of modern times. This book - the most cogent legal analysis of the subject yet to appear in any language - lays bare the core role played by the failure to adequately regulate derivatives in the financial crisis of recent years. The author's insistence that derivatives must be viewed not as profit-seeking investments but as risk management tools - and his well-grounded prescriptions to ensure that they are regulated in that way - sheds clear light on the best way for companies, financial institutions, and hedge funds to move forward in their use of these useful but highly hazardous instruments. This book clearly shows how such elements as the following fit into the legal analysis of derivatives, and how proper regulation will preserve their usefulness and economic value: ; derivatives allow for the most efficient and cost-effective risk fractioning, hence risk taking, techniques ever conceived; derivatives allow for all measurable and identifiable risks that may exist in modern finance; the ability to isolate risks and insure against risk exposures is the key to the very survival of modern financial markets; risk buyers effectively take on financial exposure to various types of risk while hedgers unload unwanted exposures; derivatives allow domestic investors to acquire exposure to foreign markets without the necessity of dealing with foreign laws, foreign investments, currency exchange, or foreign fiscal regimes; derivatives increase social welfare by making it easier and less expensive to carry out many types of financial transactions; derivatives allow governments to insulate, manage, hedge or concentrate risks deriving from financial, meteorological, and even geopolitical exposure; and derivatives allow radical changes to financial and risk structure to be performed silently and rapidly. To the question: how do we ensure that a company trading derivatives is regulated effectively? this work offers a clear and convincing answer. The author's detailed recommendations for regulatory and corporate governance measures are designed to prevent excessive risk taking, the emergence of rogue traders, and ultimately the emergence of another systemic disturbance caused by chains of derivatives-related losses.