An invitation to Systemic risk : The Collateral Concentraion Risk

3/52 : Dommages collatéraux - Collateral damage

I did this post last year but the essence is clearly visible now so posting it again under new rules and regulations.

Deja vu all over again, the over-reliance on ‘shaky’ collateral and concentration of risk is building once more – this time in the $648 trillion derivatives market. New Clearing House rules (a la Dodd-Frank) mean derivatives counterparties are required to pledge high quality collateral with the clearing houses (or exchanges) in a more formalized manner to cover potential losses.  Continue reading “An invitation to Systemic risk : The Collateral Concentraion Risk”