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Posts tagged ‘Commodity Futures Trading Commission’

Billion-Trillion Derivatives Market! … Reform or a Blowup?

Derivatives Reform on the Ropes …


 New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform. They may also signal worse things to come … The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley. – New York Times


Dominant Social Theme: We have this billion trillion market under control. Don’t worry.

Free-Market Analysis: Derivatives reform? We hardly think so …

First of all, nobody knows how big the derivatives market is and no one knows how many dollars are at risk. Those involved in making the regulations are also the largest players in the market. Whatever “reform” is being worked out will benefit those who are part of the industry.


Here’s how Wikipedia describes a derivative:

A derivative is a financial instrument which derives its value from the value of underlying entities such as an asset, index, or interest rate–it has no intrinsic value in itself. Derivative transactions include a variety of financial contracts, including structured debt obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations of these…………………………..

full article at source: http://www.thedailybell.com/30657/Billion-Trillion-Derivatives-Market–Reform-or-a-Blowup

Royal Bank of Scotland fined US$612m for rate rigging

Royal Bank of Scotland is to pay US$612 million in fines to regulators in the United States and Britain for rigging interbank lending rates, the kind of market manipulation the Hong Kong Monetary Authority sought to stave off yesterday by unveiling new measures in setting rates in the city.

More than a dozen traders at RBS offices in London, Singapore and Tokyo manipulated the London interbank offered rate, which is used to price trillions of dollars worth of loans, from at least 2006 until 2010.

Britain’s financial regulator, the Financial Services Authority (FSA), said at least 21 people from RBS were involved in rate rigging.

The lender will pay US$325 million to the US Commodity Futures Trading Commission, US$150 million to the US Department of Justice and US$137 million to the FSA, the commission said.

RBS Securities Japan has agreed to enter a plea of guilty to one count of wire fraud relating to yen Libor, the British bank said…………………

full article at source: http://www.scmp.com/business/banking-finance/article/1144342/uks-rbs-braced-libor-rate-rigging-punishment

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