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Tag Archives: OTC

CDS ABC’s

Over-the-counter, over the top from Marketplace on Vimeo.
Marketplace Senior Editor Paddy Hirsch gives a good introductory explanation of how CDS and exchange and OTC markets work in this video… (running time 6:45)

Closed loop system…

I’m reading a whitepaper on OTC markets from the interdealer broker ICAP… lots to comment upon…
ICAP is the world’s largest and most powerful broker’s broker… headquartered in London they deal in FX, fixed income, derivative, commodity, and money markets. Their operations span all currencies and timezones.
ICAP serves as the central hub for massive global flows [...]

Calm, peaceful

Several weeks ago I was sitting in the garden courtyard of my favorite place in Washington, the Freer Gallery of Art.  The fountain splashed noisily in the hushed cloister. It was calm and peaceful there and the credit crisis seemed far away.
But outside the marble walls the old order was passing away… waves of violent upheaval were crashing into [...]

Black swan…

 
Got an announcement for a credit risk course cosponsored by Columbia Business School Executive Education and PRMIA…
You can see the syllabus below…
It seems to be missing some critical components of understanding risk for credit markets… which is –one– the interrelatedness of FX, bonds, credit default swaps, equities, futures… and –two– … the use and accuracy [...]

Swaps rodeo…

~~~~WASHINGTON, D.C. – Following a hearing of the Senate Committee on Agriculture, Nutrition and Forestry on the role of credit default swaps and other off-exchange financial derivatives in the current financial crisis, Chairman Tom Harkin (D-IA) today called for strengthening regulation over these contracts. 
Last month, Harkin joined Senators Carl Levin (D-MI) and Jeff Bingaman (D-NM) [...]

Opacity crisis…

“The wise man bridges the gap by laying out the path by means of which he can get from where he is to where he wants to go.” 
+ + John Pierpont Morgan + +
I’m giving a talk in Washington this week entitled… “U.S. Bond Market Basics & Recent Events“… timely…
I’ve been developing some thoughts about [...]

Broker quotes…

 From guidence on the use of broker quotes when determining fair value for fixed income products from inactive markets… by K&L Gates…
~~~~ ” ….The example presented in the FSP will be familiar to firms dealing with the present crisis.   An entity invested in a BBB-rated tranche of a collateralized debt obligation at the beginning of [...]

Inventing a regulatory structure…

Transparency… more transparency…
SEC Chairman Cox gave opening remarks for the 21st Century Disclosure Initiative Roundtable and talked about transparency for the CDS market … his statement was the most serious effort to rein in the markets spiralling out of control that I have heard… 
~~~~ “The reason for this aggressive enforcement investigation into credit default swaps [...]

Orisons…

    To grunt and sweat under a weary life,
    But that the dread of something after death,
    The undiscover’d country from whose bourn
    No traveller returns, puzzles the will
    And makes us rather bear those ills we have
    Than fly to others that we know not of?
    Thus conscience does make cowards of us all;
    And thus the native hue of resolution
    Is [...]