Regulators struggling to define what activities are covered by hugely detailed new rules governing financial markets might do better by returning to first principles.
Latest articles from Derivatives & Structured Products
The fundamental review of the trading book set out to simplify the capital management of market risk, but has ended up drifting away from the reality of the business.
The impact of low interest rates, new EU regulations and the predicted lessening of quantitative easing in Europe and the US mean structured product providers are being called upon to provide innovative solutions to reduce risk in both retail and private banking.
Across all asset classes and from retail to sophisticated clients, new regulations agreed at the international, regional and national level are occupying an increasing share of business managers’ time. The Banker crystallises the latest thinking on the acronyms that are keeping financial market participants awake at night.
With markets lacking a clear directional trend, uncertainty over the scale of global central bank interventions and an ongoing wave of regulatory initiatives, asset allocation must remain highly adaptable. Five European portfolio managers explain their responses to the changeable conditions.
A few short years ago, securitisation was blamed for triggering the financial crisis and was seen as the root of all evil. However, there are now signs of change, with issuers slowly beginning to reconsider the market as investor appetite returns.
Since the global financial crisis, regulators have been pushing for structured products to be traded on exchanges for safety reasons. So why, in the German retail market, is the opposite happening, with more trades being done over the counter?
Swap execution facilities are supposed to be central to the efforts of the Dodd-Frank Act to make the derivatives industry safer, but delayed rule-making has thrown their very existence into doubt.
Blamed for magnifying the effects of the financial crisis, credit derivatives may be given a boost by the post-crisis regulatory changes.
There is still no clarity about the final shape of Solvency II regulations for insurers, but investment banks are already considering ways to help insurance clients earn the returns they need without excessive capital charges.
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