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Full-Text Articles in Law
An Altered Derivatives Marketplace: Clearing Swaps Under Dodd-Frank, Eduard H. Cadmus
An Altered Derivatives Marketplace: Clearing Swaps Under Dodd-Frank, Eduard H. Cadmus
Fordham Journal of Corporate & Financial Law
Though over a year has passed, the impact of the Dodd Frank Act remains unclear. This Note examines the provisions of the Act that relate to swap transactions within the context of pre-reform and postreform markets. In order to reduce the uncertainties inherent in unregulated swap transactions, the Act employs a comprehensive framework, which includes mandatory clearing through derivative clearing organizations, extensive reporting requirements, margin requirements, and position limits. This Note argues that, in doing so, the Dodd Frank Act addresses the fundamental failures of pre-reform derivative markets. However, the importance of the role for derivative clearing organizations under this …
Governing Systemic Risk: Towards A Governance Structure For Derivatives Clearhouses, Sean J. Griffith
Governing Systemic Risk: Towards A Governance Structure For Derivatives Clearhouses, Sean J. Griffith
Faculty Scholarship
Derivatives transactions create systemic risk by threatening to spread the consequences of default throughout the financial system. Responding to the manifestations of systemic risk exhibited in the financial crisis, policy-makers have sought to solve the problem by requiring as many derivatives transactions as possible to be “cleared” (essentially guaranteed) by a clearinghouse. The clearinghouse will centralize and, through the creation of reserve accounts, seek to contain systemic risk by preventing the consequences of default from spreading. This centralization of risk makes the clearinghouse the new locus of systemic risk, and the question of systemic risk management thus becomes a question …