Views on improving the integrity of global capital markets
15 December 2010

Secret Society: Business as Usual for Derivatives

Posted In: Derivatives

When the near-collapse of the global financial system in 2008 led to widespread calls for regulatory reform, much of the outcry was over derivatives—a major culprit in the worst financial crisis since the Great Depression.
 
In response, the Dodd–Frank Wall Street Reform and Consumer Protection Act mandated exchange trading and greater transparency for the highly profitable derivatives market. However, a recent New York Times article tells a completely different story. The article, “A Secretive Banking Elite Rules Trading in Derivatives,” by Louise Story, depicts a secret society of Wall Street investment banking giants who “have fought to block other banks from entering the market and they are also trying to thwart efforts to make full information on prices and fees freely available.” Even more troubling: They are likely to have a major say in the derivatives-clearing requirements devised as part of the Dodd-Frank Act.

About the Author(s)
Crystal Detamore

Crystal Detamore is a communications director at CFA Institute and a former columnist for Entrepreneur magazine.

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