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Derivative Risk to Financial System Seen Easing in ISDA Survey 

April 8, 2014
John Glover, Bloomberg

The threat posed to financial markets by derivatives has been curbed by regulators even as costs for investors have increased, according to an industry survey.

More than 57 percent of those questioned by the International Swaps & Derivatives Association said the system is on a sounder footing than it was before the financial crisis. That improvement has brought with it more red tape, as well as greater expense, according to respondents, of which 42 percent were non-financial corporates, almost 30 percent were banks and 20 percent asset managers.

Regulators sought to rein in the systemic danger of derivatives after the 2008 collapse of Lehman Brothers Holdings Inc. exposed how they linked the world’s biggest financial institutions so that a failure by one threatened to pull down the rest. Reporting transactions to data repositories and exchanging contracts through central clearinghouses has been introduced to prevent a repeat and to ensure supervisors can trace connections.

Read more: Bloomberg

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