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Friday, May 15, 2009

Derivatives are in for an overhaul.......It's About time!

President Obama announced yesterday that the Derivatives Market is about to undergo a major overhaul in that these exotic investments will become more transparent by hopefully being (for the most part) listed on Derivatives Exchanges



Since the big banks and Insurance Companies (such as AIG) have written most of these contracts, and since there are potentially $Trillions of dollars in assets that cannot be valued properly, and therefore cannot be cashed by the buyers, affecting the health of the entire global financial system, don't bet that the administration will have an easy time convincing these entities to list their contracts on open exchanges.


Though this transparency may be good for the overall economy, it may not be very good for some big players whose financial future may depend on keeping these contracts from the public eye.

However, if I don't miss my guess, the Obama administration will make these changes, or at least a strong oversight regimen, probably this year.


An Online Derivatives Exchange May be exactly what the doctor ordered, and overdue.

For more info on this subject check out the New York Times Editorial today.


Update June 4-09 New York Times


Update on the Obama Plan July 24th-09 at Breaking Views .










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