Collateral, Netting and Systemic Risk in the OTC Derivatives Market - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Collateral, Netting and Systemic Risk in the OTC Derivatives Market write by Mr.Manmohan Singh. This book was released on 2010-04-01. Collateral, Netting and Systemic Risk in the OTC Derivatives Market available in PDF, EPUB and Kindle. To mitigate systemic risk, some regulators have advocated the greater use of centralized counterparties (CCPs) to clear Over-The-Counter (OTC) derivatives trades. Regulators should be cognizant that large banks active in the OTC derivatives market do not hold collateral against all the positions in their trading book and the paper proves an estimate of this under-collateralization. Whatever collateral is held by banks is allowed to be rehypothecated (or re-used) to others. Since CCPs would require all positions to have collateral against them, off-loading a significant portion of OTC derivatives transactions to central counterparties (CCPs) would require large increases in posted collateral, possibly requiring large banks to raise more capital. These costs suggest that most large banks will be reluctant to offload their positions to CCPs, and the paper proposes an appropriate capital levy on remaining positions to encourage the transition.
Collateral, Netting and Systemic Risk in the OTC Derivatives Market
Collateral, Netting and Systemic Risk in the OTC Derivatives Market - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Collateral, Netting and Systemic Risk in the OTC Derivatives Market write by Manmohan Kumar. This book was released on 2010. Collateral, Netting and Systemic Risk in the OTC Derivatives Market available in PDF, EPUB and Kindle.
Making OTC Derivatives Safe—A Fresh Look
Making OTC Derivatives Safe—A Fresh Look - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Making OTC Derivatives Safe—A Fresh Look write by Mr.Manmohan Singh. This book was released on 2011-03-01. Making OTC Derivatives Safe—A Fresh Look available in PDF, EPUB and Kindle. Recent regulatory efforts, especially in the U.S. and Europe, are aimed at reducing moral hazard so that the next financial crisis is not bailed out by tax payers. This paper looks at the possibility that central counterparties (CCPs) may be too-big-to-fail entities in the making. The present regulatory and reform efforts may not remove the systemic risk from OTC derivatives but rather shift them from banks to CCPs. Under the present regulatory overhaul, the OTC derivative market could become more fragmented. Furthermore, another taxpayer bailout cannot be ruled out. A reexamination of the two key issues of (i) the interoperability of CCPs, and (ii) the cost of moving to CCPs with access to central bank funding, indicates that the proposed changes may not provide the best solution. The paper suggests that a tax on derivative liabilities could make the OTC derivatives market safer, particularly in the transition to a stable clearing infrastructure. It also suggests reconsideration of a "public utility" model for the OTC market infrastructure.
Derivatives and Systemic Risk
Derivatives and Systemic Risk - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Derivatives and Systemic Risk write by Robert Russell Bliss. This book was released on 2005. Derivatives and Systemic Risk available in PDF, EPUB and Kindle.
Post-Trade Processing of OTC Derivatives
Post-Trade Processing of OTC Derivatives - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Post-Trade Processing of OTC Derivatives write by Olga Lewandowska. This book was released on 2020-04-30. Post-Trade Processing of OTC Derivatives available in PDF, EPUB and Kindle. The financial crisis of 2007–2009 exposed the weaknesses of the global over-the-counter (OTC) derivatives market such as limited transparency regarding risk exposures, poor counterparty risk management practices, and the risk of contagion arising from interconnectedness in this market. In the aftermath of the financial crisis, regulators introduced worldwide legislative and regulatory changes aimed at increasing the transparency and stability of the financial markets. In this book, Dr. Olga Lewandowska explores those novel regulatory solutions and their impact. The main focus is on central counterparty (CCP) clearing that became mandatory for OTC derivatives under the new regulatory paradigm. In four research papers, she analyzes CCP from different risk perspectives and based on four diverse research methods. Her book offers a comprehensive assessment of the risk-reduction potential of the CCPs, their implications for the financial markets, and the practical challenges in the implementation of the recent financial market reforms.
