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Derivatives in sentence

246 examples of Derivatives in a sentence

With the recent missive to the derivatives industry, they are now starting to deal with bankruptcy – and well they should.
But, though US bankruptcy law usually does a good job of restructuring industrial firms, it cannot restructure financial firms, because bankruptcy’s basic rules – which allow the court to consolidate the firm’s assets, redeploy them, and sell the rest – do not apply to most financial contracts, like derivatives.
But, ominously, it could not sell its large portfolio of derivatives contracts – deals based on movements of interest and currency rates.
By most accounts, Lehman’s derivatives portfolio was a winner when it went bankrupt, but bankruptcy exemptions for derivatives allowed Lehman’s counterparties to close out their positions rapidly, in ways that were costly for Lehman, chaotic for financial markets, and damaging to the real economy.
The derivatives market is exempt from rules that stop creditors from grabbing collateral and terminating their contracts when the debtor files for bankruptcy.
US regulators, for example, cannot first try bankruptcy before deploying their expanded powers under the 2010 Dodd-Frank financial-reform legislation; if they did, the bankrupt firm’s counterparties in the derivatives and repo markets would close out their contracts and dump their collateral as soon as they could.
The regulators’ letter to the ISDA asked the derivatives industry to rewrite its standard contracts, so that a bankrupt firm’s portfolio is not ripped apart as soon as it files.
But, as regulators reflect further, they will recognize that they cannot rely on the derivatives industry to revise its contracts any more than industrial bankruptcy relies on creditors’ contracts to stop failed firms from being ripped apart.
That solution will be incomplete, however, because not all derivatives traders are regulated financial institutions, and because many creditors would find ways to circumvent the contract and the requirement.
The regulators’ call to the ISDA for voluntary action will not amount to much if it is just a request to the derivatives industry to act against its own financial interests.
But what was predictable and predicted was the manner in which under-regulated derivatives could inflame the crisis.
The Financial Crisis Inquiry Commission put the blame squarely on the derivatives market as one of the three central factors driving the events of late 2008 and 2009.
They should have been reined in, but the Commodity Futures Modernization Act of 2000 prevented the regulation of derivatives.
Even back in the 1990’s, regulators would privately complain of the difficulty of retaining any staff capable of understanding the rapidly evolving derivatives market.
Research assistants with one year of experience working on derivatives issues would get bid away by the private sector at salaries five times what the government could pay.
The White House and Congress have also been acting to gut the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, which strengthened the financial system in several ways, including by imposing higher capital requirements on banks, identifying “systemically important financial institutions,” and requiring more transparency in derivatives.
The sub-prime mortgage loan problem triggered a drop in some financial institutions’ key lines of business, particularly their opaque but extremely profitable derivatives businesses.
Shaw’s funds and the loans can be the complex derivatives that make up D.E.
The just-collapsed credit bubble, fueled by so-called special investment vehicles, derivatives, collateralized debt obligations, and phony triple-A ratings, was built on the illusions of mathematical modeling.
We still don’t know the full extent of linkages among financial institutions, including those arising from non-transparent derivatives and credit default swaps.
There are no peculiarly Western or Eastern mobile phones or financial derivatives.
The calls to curb speculation in derivatives markets or short sales have this flavor.
The Derivatives Market’s Helpful EnemiesCHICAGO – The launch of two European antitrust investigations into the market for credit default swaps (CDS) might appear to be no more than a political vendetta against one of the alleged culprits behind the 2010 European sovereign-debt crisis.
In fact, the ideological bias of Europeans against CDS might be beneficial in the long term for the development of a better market for CDS, and for derivatives in general.
Indeed, today the market for derivatives is oligopolistic, with a few banks running huge profit margins.
The markets for other derivatives are not much better.
Market concentration renders mostly illusory the beneficent risk-spreading role that is claimed for derivatives, because the bulk of the risk is borne by very few players.
Over-the-counter trading also contributes to the opacity of derivatives markets, further reducing competition and increasing the margin enjoyed by the traders – and the prices that final users (mostly industrial firms) must pay.
According to European Commission spokeswoman Amelia Torres, the latest efforts at antitrust enforcement can be seen as complementing pending derivatives regulation.
Declining house prices are key to the financial crisis and the outlook for the economy, because mortgage-backed securities, and the derivatives based on them, are the primary assets that are weakening financial institutions.
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