The post-reform guide to derivatives and futures
By: Gordon F. Peery
Series: Wiley finance series
Publisher: Wiley
Published: 2012
Place of publication: Hoboken, N.J
Language: eng
ISBN-13: 9780470553718
Subjects: BUSINESS & ECONOMICS / Finance; Global Financial Crisis, 2008-2009; Government policy; Derivative securities; Futures
Description: "An in-depth look at the best ways to navigate the post-reform world of derivatives and futuresThe derivatives market is one of the largest, and most important financial markets in the world. It's also one of the least understood. Today we are witnessing the unprecedented reform and reshaping of this market, and along with these events, the entire life cycle of a derivatives transaction has been affected. Accordingly, nearly all market participants in the modern economy need to view the handling of risk by derivatives in a very different way. Many aspects of financial services reform are based on a belief that derivatives caused the Great Recession of 2008. While the difficulties we now face cannot be blamed solely on derivatives, the need to understand this market, and the financial products that trade within it, has never been greater. The Post-Reform Guide to Derivatives and Futures provides straightforward descriptions of these important investment products, the market in which they trade, and the law that now, after July 16, 2011, governs their use in America and creates challenges for investors throughout the world. Author Gordon Peery is an attorney who works exclusively in the derivatives markets and specializes in derivatives and futures reform and market structure. Since representing clients in Congressional hearings involving Enron Corp., he has developed extensive experience in this field. With this guide, he reveals how derivatives law, and market practice throughout the world, began to change in historic ways beginning in 2011, and what you must do to keep up with these changes.  Explains what derivatives and futures are, who trades them, and what must be done to manage risk in the post reform world  Accurately reflects the futures and derivatives markets as they exist today and how they will be transformed by the Dodd-Frank Wall Street Reform and Consumer Protection Act  Highlights the risks and common disputes regarding derivatives and futures, and offers recommendations for best practices in light of the evolving law governing derivatives  The financial crisis has changed the rules of Wall Street, especially when it comes to derivatives and futures. The Post-Reform Guide to Derivatives and Futures will help you navigate this evolving field and put you in a better position to make the most informed decisions within it"--
Notes: Includes index.
Table of contents: title: Machine generated contents note: Acknowledgments Preface Introduction Part I: The Crises That Led to Derivatives Reform Chapter 1: Seven Causes of the 2008 Market Crises Ignoring the Warning Signs More than Seven Causes of the 2008 Market Crises An Incomplete Response to Problems Stemming from the Enron Bankruptcy Enron Finance Used by Banks and the Lack of Regulation The Absence of Effective Regulation The Shadow-Banking System Development of an Unregulated Global Derivatives Market The Rise of Credit Derivatives and the Credit Default Swap Private-Label Residential Mortgage-Backed Securitization U.S. Policy Fostering Home Ownership and GSE Mismanagement Derivatives and Structured Products Accounting Practices Notes Chapter 2: Timeline for U.S. Derivatives Reform March 17, 2008: Bear Stearns Is Sold March 27, 2008: Barack Obama Introduces Reform Principles September 15, 2008: A Bankrupt Lehman Brothers November 2008-January 2009: American Leadership Ascends March 26, 2009: Geithner Provides Testimony to Congress on Reform May 13, 2009: Geithner Writes a Letter to Harry Reid June 2, 2009: An Early Voice Speaks Out against the Clearing Mandate June 22, 2009: American Corporations Lobby against Central Clearing Mandates for OTC Derivatives July 22, 2009: Introduction of Legislation Favoring Exemptions to the Clearing Mandate July 30, 2009: Introduction of Broad Outlines of the New Law September 8, 2009: The Industry Attacks Centralized Clearing October 2, 2009: House Releases Draft of OTC Derivative Legislation November 11, 2009: Senate Releases Draft of OTC Derivative Legislation December 11, 2009: House Passes the Wall Street Reform and Consumer Protection Act of 2009 January 1, 2010: The New York Fed Publishes the "Policy Perspectives on OTC Derivatives Market Structure" April 7, 2010: Financial Crisis Inquiry Commission Begins Hearings April 16, 2010: Senator Lincoln Introduces the Wall Street Transparency and Accountability Act of 2010 April 22, 2010: President Obama Returns to Cooper Union to Speak on Reform April 26-27, 2010: Senate Votes to Delay Debate on Derivatives Reform April 27, 2010: The Goldman Hearing April 28, 2010: Senate Votes Again on Proceeding with Financial Services Reform May 20, 2010: Senate Passes Its Version of the Legislation June 30, 2010 and July 15, 2010: Congress Approves Legislation and Seeks the President's Approval July 21, 2010: President Obama Signed Dodd-Frank into Law U.S. Rule Making in 2010 and 2011 U.S. Reform Blazes the Trail for Global Derivatives Reform Notes Part II: Derivatives Reform Introduction to Part II Chapter 3: Introduction to Futures, Margin, and Central Clearing Three Crises and the Need for the Futures Model A Brief History of Futures Contracts and Markets The Commodity Futures Modernization Act of 2000 Introduction to the Futures Model and Basic Futures Concepts Regulation of Futures Examples of Futures and Other Listed Products A Futures Contract in Action Default by a Clearing Member in the Futures Model Global Reform and the Futures Model Chapter 4: U.S. Derivatives Law in Title VII of Dodd Frank Organization of Dodd-Frank Introduction to Titles VII and VIII The Approach to Understanding New Derivatives Law in the United States Products People Taxpayers Whistleblowers Platforms Chapter 5: Title VIII of Dodd Frank Opposition to Title VIII Before Title VIII What Exactly Does Title VIII Set into Motion and When? What Is a Systemically Important Activity? Practical Results of the New Law Notes Chapter 6: A Primer on Legal Documentation Background "Let's Use an ISDA" History of the ISDA Basic OTC Architecture The ISDA Documentation in Practice, and Problems in 2008 Notes Chapter 7: The Life Cycle of a Cleared Derivatives Trade Step One: Legal Documentation Step Two: Trade Execution via an SEF, SB-SEF, or DCM Step Three: Alleging and Affirming a Trade; Reporting in Real Time Step Four: The FCM Take-Up Step Five: Trade Is Centrally Cleared Step Six: The Trade Is Reported for the Second Time Part III: Trading Before and After Reform Chapter 8: The History of Derivatives and Futures The Earliest Derivative Trees, Forests, and Wildfires Did They Exist in Antiquity? OTC and Exchange Derivatives Back to Biblical Times The Dark Ages and Medieval Europe The Muslim Empire Development and Early Use of the Bill of Trade or Exchange After the Protestant Reformation An Early Sighting of the Term Commodity Pools Ten Wise Men The Modern Era Begins in the States in 1848 Early-Twentieth-Century America S&Ls and Mortgage Finance Functions Well Before Abuses The Creation of Fannie and Freddie Disco, Dealers, Swaps, and Redlining in the 1970s U.S. Regulators Formally Recognize Swaps The Birth of the OTC Market The Evolution of Option Markets The Futures Trading and Practices Act and the 1993 Swaps Exemption ISDA The 1987 Crash and 1990s Crises The Commodity Futures Modernization Act of 2000 Enron Loophole The First Decade of the Twenty-First Century Notes Chapter 9: Market Structure Before and After 2010 Ancient Commodity Markets Earliest Modern Exchanges The Great Depression and Bucket Shops Open Outcry and Pits Give Way to the Machines Reform of U.S. Market Structure Derivative Clearing Organizations Swap Data Repository Market Participants in the OTC Derivatives Trade Part IV: Continuing Education Chapter 10: Survey of Derivatives Overview of the Strategies and Trade Structure Early Derivatives and the Beginnings of the OTC Market Forwards versus Options Option Basics Options Pricing Basic Option Strategies Exchange-Traded Options Swaps Follow Options in the Evolution of Derivatives Credit Derivatives Credit-Linked Notes and Other Securities Total Return Swaps Interest Rate Swaps Equity Swaps Currency Derivatives Property Derivatives Commodity Derivatives Energy Swaps Structured Products, Securitization, CDOs and CDOs Squared Exchange-Traded Derivatives: Futures and Other Listed Products Additional Resources Online Resources Glossaries About the Author Index.