Takeouts: Football, Reforming Derivatives Markets

Friday, November 27, 2009

  • Sports Takeout: Ibrahim Abdul-Matin joins us for a look back at Thanksgiving's football games and those coming up over the weekend.
  • Business Takeout: The New York Times' finance reporter, Louise Story, explains why the risky derivatives market needs reform, and why banks and bankers seem to want to prevent that reform from happening.

Guests:

Ibrahim Abdul-Matin and Louise Story

Comments [2]

Sam


Several academic studies on TRACE that are available on FINRA's website show that, if done carefully, transparency does reduce transaction costs. You can see these studies here:

http://www.finra.org/Industry/ContentLicensing/TRACE/P117112

Nov. 27 2009 01:35 PM
Sam

Louise Story said that companies that hedge were resisting efforts to improve transparency. This is not correct. The proximity of this statement to her discussion of the changes to the corporate bond market makes it especially misleading. End users support the implementation of a trade repository for all trades AND improvements to price transparency via a system such as TRACE for corporate bonds. The reason end users a system such as TRACE is that it provides price transparency without the onerous margin/collateral requirements of an exchange or clearinghouse. Onerous collateral requirements are the #1 concern of end users. 3M and Caterpillar are against exchange trading and clearing, but would likely support a central trade repository and a system like TRACE.

Nov. 27 2009 01:33 PM

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