Perhaps the most significant bugbear for the derivatives industry has long been the outside perception that it is an inherently dangerous business, an idea that has been propagated by the collapses of Barings, Enron and latterly Refco. The futures industry however has largely regarded this notion of danger as representative of a lack of understanding of the way in which it works, especially when it comes to exchange traded business with its risk-protecting central counterparties.
In the examples of Barings and Enron outsiders were quick to blame the instruments traded rather than the management practices that precipitated crisis. Although the situation had improved somewhat by the time the Refco scandal broke, there were still the predictable news reports condemning the industry with the mainstream press often failing to pick up on the point that the only Refco division to remain largely intact when the firm went under was in fact...