The time for dire predictions is over. Over the counter derivative specialists are now soberly getting to grips with a new US regulatory regime. The rules are still not fully formed, but their shape is becoming clear. As Elise Coroneos reports, some market experts still think the law likely to be passed by Congress is too intrusive, while others relish the opportunities it will bring. All, however, are privately working out how to live with it.
The synthetic collateralised debt obligations that nearly brought down the US financial system in 2008 were almost as foreign to most derivatives professionals as they were to the average mortgage borrower.
These were highly structured credit products, which grew out of the asset-backed securities discipline at Wall Street and City banks.
But derivatives they were, nonetheless, and the discovery of billions of dollars of these instruments, stuffed in the bottom drawers of nearly all...