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Full-Text Articles in Law
Towards More Sustainable And Less Crisis-Driven Financial Regulation, Steven L. Schwarcz
Towards More Sustainable And Less Crisis-Driven Financial Regulation, Steven L. Schwarcz
Faculty Scholarship
No abstract provided.
The Governance Structure Of Shadow Banking, Steven L. Schwarcz
The Governance Structure Of Shadow Banking, Steven L. Schwarcz
Faculty Scholarship
No abstract provided.
Hazardous Hedging: The (Unacknowledged) Risks Of Hedging With Credit Derivatives, Gina-Gail S. Fletcher
Hazardous Hedging: The (Unacknowledged) Risks Of Hedging With Credit Derivatives, Gina-Gail S. Fletcher
Faculty Scholarship
Is hedging with credit derivatives always beneficial? The benefit of hedging with credit derivatives, such as credit default swaps, is presumed by the Dodd-Frank Act, which excludes hedge transactions from much of the new financial regulation. Yet, significant new risks can arise when credit derivatives are used to manage risks. Hedging, therefore, should be defined not only in relation to whether a transaction offsets risks, but also whether, on balance, the risks that are mitigated—as well as any new risks that arise—are outweighed by the potential benefits.
Regulators of the derivatives markets must consider the risks of hedging with credit …