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Coming Up Short: The United States' Second-Best Strategies For Corralling Purely Speculative Derivatives, Timothy E. Lynch
Coming Up Short: The United States' Second-Best Strategies For Corralling Purely Speculative Derivatives, Timothy E. Lynch
Faculty Works
Purely speculative derivatives (PSDs) are derivatives in which neither counterparty is engaged in hedging. Unless used for entertainment purposes, PSDs are irrational, less-than-zero-sum transactions. Entities that engage in PSDs jeopardize their stakeholders and increase systemic risk. PSDs can also increase moral hazard, be used for regulatory arbitrage, and redirect resources away from efficient allocation of market capital. PSDs should be unenforceable, void for public policy reasons, except where expressly permitted to provide gambling entertainment, enhance price discovery, or increase liquidity for hedgers. In the U.S., however, PSDs are often legal and enforceable, even after the financial crisis of 2008 that …
Regulation Of Over-The-Counter Derivatives: A Comparative Study Of Proposals In Singapore And Hong Kong, Chao-Hung Christopher Chen
Regulation Of Over-The-Counter Derivatives: A Comparative Study Of Proposals In Singapore And Hong Kong, Chao-Hung Christopher Chen
Research Collection Yong Pung How School Of Law
This chapter identifies some of the potential legal and policy issues involved in the future regulation of over-the-counter (OTC) derivatives. First, regulators must be cautious in the regulation and solvency of some mammoth clearing- houses. Second, Singapore and Hong Kong both face challenges in the areas of global regulatory cooperation and extra-territorial regulatory effects. Third, the exact scope of a clearing obligation determines whether there is any regulatory competition or room for regulatory arbitrage in the future. Fourth, there are legal definition problems with the term ‘derivative’ and its sub-categories that must be addressed. Fifth, there are potential privacy and …
Structured Notes Fiasco In The Courts: A Study Of Relevant Judgments In Taiwan Between 2009 And 2010, Christopher Chao-Hung Chen
Structured Notes Fiasco In The Courts: A Study Of Relevant Judgments In Taiwan Between 2009 And 2010, Christopher Chao-Hung Chen
Research Collection Yong Pung How School Of Law
The purpose of this article is to analyse relevant judicial decisions in Taiwan regarding structured notes sold to retail investors. Regarding pre-sale disputes, one issue was that investors failed to read contractual documents properly before signing contracts, so there was a question whether they could later claim a bank’s violation of its duty to explain. This article favours the view that an investor’s signature may exempt a bank’s duty, provided that investors are made aware of relevant warnings. In addition, for suitability assessment, relevant judgments show that customers were too easily classified as active investors based on a simple questionnaire. …
Information Disclosure, Risk Trading And The Nature Of Derivative Instruments: From Common Law Perspective, Christopher Chao-Hung Chen
Information Disclosure, Risk Trading And The Nature Of Derivative Instruments: From Common Law Perspective, Christopher Chao-Hung Chen
Research Collection Yong Pung How School Of Law
This paper explores issues of pre-contractual disclosure for derivative instruments, of which this paper describes as contracts to trade risks, in the UK and US. While there is no general duty of disclosure in common law, this paper focuses on whether there should be a duty of disclosure for derivative instruments by comparing with securities law and insurance law. This paper argues that mandatory disclosure in the securities market cannot be extended to exchange-traded futures contracts (save where securities are involved) because of the nature of securities. In addition, this paper argues that derivative instruments, though similar to insurance in …
Does Private Equity Create Wealth? The Effects Of Private Equity And Derivatives On Corporate Governance, Randall Thomas, Ronald W. Masulis
Does Private Equity Create Wealth? The Effects Of Private Equity And Derivatives On Corporate Governance, Randall Thomas, Ronald W. Masulis
Vanderbilt Law School Faculty Publications
Private equity has reaped large rewards in recent years. We claim that one major reason for this success is due to the corporate governance advantages of private equity over the public corporation. We argue that the development of substantial derivative contracts and trading has significantly weakened the governance of public corporations and has created a need for financially sophisticated directors and much closer supervision of management. The private equity model delivers these benefits and allows corporations to be better governed, creating wealth gains for investors.
Derivatives And Risk Framework, Ravichandra Vasant Kini
Derivatives And Risk Framework, Ravichandra Vasant Kini
LLM Theses and Essays
The purpose of this thesis is to explore the dynamics of the fast-growing international financial markets and to study in particular the risks associated with the different kinds of financial instruments. The Barrings Bank Crisis, Proctor and Gamble, Gibson Greetings cases against Bankers Trust, and the Orange County Bankruptcy has prompted regulatory authorities to focus on the risks involved in the derivatives markets. In this paper, the first chapter explains the basic working of the different kinds of derivative instruments especially concentrating on Swaps, Futures, and Options. The second chapter goes on to explain, the risks involved in the uses …
The Uses And Abuses Of Risk Management: How Men Learnt To Bet Against The Gods, Kenneth Anderson
The Uses And Abuses Of Risk Management: How Men Learnt To Bet Against The Gods, Kenneth Anderson
Book Reviews
This 1997 review in the Times Literary Supplement (London) conjoins two books - the first, by investment banker turned finance historian Peter L. Berstein, is a history of the idea of risk, as it developed from Renaissance times through contemporary finance. The second, by the former editor of the derivatives journal Risk, Lillian Chew, is an account of contemporary financial derivatives and their uses and abuses. The point of linking these two books in a single review is to point out that the basic ideas behind today's financial derivatives - forms of forwards, options, swaps, and so on - are …