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.
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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.
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?
Blamed for magnifying the effects of the financial crisis, credit derivatives may be given a boost by the post-crisis regulatory changes.
Derivatives collateral management used to be a purely operational matter, but post-crisis regulation and sovereign downgrades have made it into a strategic priority for every bank.
The advent of Basel III and funding constraints in the eurozone have prompted investment banks to make greater efforts to transfer the exotic risks generated from their derivatives structuring businesses.
As equity markets look set to stagnate for some time, investors want to know not just how to hedge volatility, but how to profit from it.
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.
An increasing number of financial institutions from international banks to local specialist players are developing sharia-compliant structured products, offering investors limited downside risk and high returns. But as the uptake for such products increases, so does the pressure of ensuring that they are 100% sharia-friendly.
Many of Latin America's high-net-worth individuals are repatriating their funds and an increasing number of foreign investors are targeting the region, thanks to its rapidly expanding economy. With such demand for local product providers, domestic firms are finding themselves having to pit their specialist knowledge against the international reach of large foreign banks, making competition tough.
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