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Tag Archive: CREDIT DEFAULT SWAPS


2012 Mid Year World economy towards the path of Bailouts & Bankruptcies

Filed under: Economies — 1 Comment
June 30, 2012

Well its the last day of the month and the world economy standing in the mid of year 2012. Lets try to pull the events by connecting the dots and see where the world is :
1) After months weeks years of posturing and denial Spain and Cyprus formally requested aid from Europe bailout funds. More so they have officially confessed to their insolvency and the insolvency of their banking system.
Spain 10 year bond yield breached the worst level and it touched the 7% in return many od the Spain bank ratings got junk by Moodys

2) Over in the US, the city of Stockton, California filed for bankruptcy this week… View full article »

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Derivatives Credit : Credit Derivatives

Filed under: Financial Jargons — 2 Comments
May 25, 2012

People write to remember things, I write to forget. I am sure that definitely had many post on Credit derivatives.
Many of my friends and colleagues are still not so familiar with them and just wanted to define for them . For them the understanding of credit derivatives is that these monster was behind the subprime crisis in 2008, Lehman crisis, and later the Eurocrisis and now the Grexit.

Let me try to put some definitions quote and unquote: View full article »

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JP Morgan Series :

Filed under: Financial Crisis — 1 Comment
May 14, 2012

Picking up from the CDX.NA.IG indices are composed of 125 North American corporate credits that are investment grade when the index begins trading understanding JP Morgan loss. As derivative’s are zero sum game so if JP Morgan lost $2 billion from April 2012, than who made a $2 billion profit in the same time, well I don’t know.May be some unidentified hedge funds apparently. It was like once the sharks smelled blood in the water, they started betting against the whale, making his losses much bigger. The huge size that traders were complaining about

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Understanding JP Morgan Loss

Filed under: Financial Crisis — 6 Comments
May 12, 2012

Leading financial media broke the story on thursday night about the $2bn trading loss on credit derivatives trading, which chief executive Jamie Dimon blamed on errors,sloppiness and bad judgement” and warned “could get worse”.

Well the Centre of loss in non other than bank’s chief investment office (CIO).It is responsible for managing and offsetting the vast amounts of “credit exposure” the bank incurs through its daily View full article »

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More on OTC derivatives reform :

Filed under: Economies, Financial Crisis — 2 Comments
April 24, 2012

As I am trying to communicate from my last post that the market for OTC derivatives is mammoth in size. I have tried to put my views in my past articles over OTC.Derivatives Central Clearning & Dodd – Frank .Central Clearning Of derivatives & Dodd – Frank continues… , Credit derivatives Cat bonds & Cat Swaps ,OTC derivative series CDS, Bonds and Basis Trade

I got the opportunity to read one of the recent paper on Reforming the OTC derivatives market by William C Dudley .

Dudley believes the pre-crisis OTC derivatives market needed reform. Let’e examine his case. View full article »

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Central Clearning Of derivatives & Dodd – Frank continues…

Filed under: Economies — 3 Comments
April 18, 2012

Continuing from my yesterday’s post why Central clearing is one of the solution if we just analyse recent crisis.In the financial crisis of 2008, banks feared that their trading partners might not be able to meet obligations to make good on the credit-default swaps,and on derivatives plus other financial arrangements. The situation set off a chain reaction that paralyzed global markets until governments and central banks provided enormous financial support.

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OTC Derivatives Central Clearning & Dodd – Frank

Filed under: Economies, Merchant Banking, Trending Brokers — 9 Comments
April 17, 2012

Ready or Not ? Here it comes

Lot of Hedge funds and Investment banks have started publishing the margin FAQ’s after the Credit crisis. As part of Dodd-Frank, by the end of 2012, all standardised over-the-counter derivatives will have to be cleared through central counterparties.

That’s the biggest challenge for the market as OTC derivatives account for almost 95% of the derivatives markets. In June 2011, the notional value of outstanding OTC derivatives was around $707 trillion or €540 trillion. View full article »

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Critical events that I can recall on the Crisis

Filed under: Economies, Financial Crisis — 6 Comments
April 10, 2012

RISK is a four letter word and it become cult with some models like VAR , stress testing analyses. Time and again the crisis have proven you cannot copy paste the past for the future predictions. Markets have become more volatile , more extreme operational risk, systemic risk become the buzz word, I am posting some events that I can recall in the global economy :
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More on Prop Trader & Emerging-markets

Filed under: Economies, Efficient Markets, Trending Brokers — Leave a comment
April 6, 2012

Takings from my last post  A Prop Trader or Rogue Trader and my past posts on the same topic The Rogue Trader or The Rogue Banks and TO BE A ROGUE TRADER would like to share few more views over them. As I reveled in the past that prop trader don’t trade on behalf of clients but they use institution own money to trade.They speculate and their focus are is emerging markets.

The two principles on which they work :

  •  You need to be dispassionate about your trade, to control your internal hurdles that may attach you to it emotionally.
  • You need to have specific knowledge of the asset you’re trading. You must have contacts in the asset’s country that can supply you with information that is open to anyone else (otherwise it’s insider trading) but that is still extremely valuable.

    • View full article »

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Derivatives derivatives derivatives soooo many

Filed under: Finance Awareness, Financial Crisis — 6 Comments
March 27, 2012

Was going through Zerohedge and find some interesting facts the (TBTF) Too Big To Fail get Too Bigger To Fail. The top 5 banks of the world holds 97% approx $221 trillion derivative outstanding.

$220 trillion is more than enough for the world to collapse in a daisy chained failure of bilateral netting (which not even all the central banks in the world can offset).

Time and again history has repeated itself unregulated derivatives are prone to catastrophic failure. And yet, nearly four years after the crash, and nearly two years since the passage of the Dodd-Frank law, the multitrillion-dollars derivatives market is still dominated by a handful of big banks, and regulation is a slow work in progress. Unregulated derivatives are still an economic threat. That’s because derivatives have become deeply embedded in the global economy. ( an article from Ny times quoted) View full article »

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