Securities Law Commons^™

The Regulation Of Equity Index Futures, Lin (Lynn) Bai

Faculty Articles and Other Publications

Equity index futures are one of the most actively traded derivative instruments in financial markets around the world. Advancements in trading and clearing technologies transformed the marketplace over the past two decades. Regulation drastically changed to keep pace with the market’s development. New rules have been implemented covering trading activities, risk management, market surveillance, and customer protection. Legal literature on the regulation of this important financial instrument is surprisingly antiquated. Existing papers were written decades ago and do not reflect the true metes and bounds of today’s regulatory landscape. This paper fills the void. It provides a comprehensive discussion of …

The Systemic Risk Paradox: Banks And Clearinghouses Under Regulation, Felix B. Chang

Faculty Articles and Other Publications

Consolidation in the financial industry threatens competition and increases systemic risk. Recently, banks have seen both high-profile mergers and spectacular failures, prompting a flurry of regulatory responses. Yet consolidation has not been as closely scrutinized for clearinghouses, which facilitate trading in securities and derivatives products. These nonbank intermediaries can be thought of as middlemen who collect deposits to ensure that each buyer and seller has the wherewithal to uphold its end of the deal. Clearinghouses mitigate the credit risks that buyers and sellers would face if they dealt directly with each other.

Yet here lies the dilemma: large clearinghouses reduce …