Learning Curve

This is Part II of a two-part Learning Curve on equity index correlation. Part I, which appeared last week, explained how many retail structured products are long correlation. Part II begins with another example of a worst-of product that is long correlation, the daily range accrual note, and concludes with a section on outperformance options and the market for equity correlation.

The dispute resolution mechanism established as part of the Big Bang Protocol was recently put to the test for the first time in connection with Cemex.

On December 11, 2009 the U.S. House of Representatives passed sweeping legislation entitled The Wall Street Reform and Consumer Protection Act of 2009.

On Oct. 20, the European Commission published a document titled: "Ensuring efficient, safe and sound derivatives markets: future policy actions."

Counterparty credit risk management has been evolving for over a decade from passive risk quantification and reserves to active management and hedging.

Section 1260 of the U.S. Internal Revenue Code (the "Code") was enacted in 1999 in response to a specific targeted tax planning strategy that involved writing derivatives on hedge funds.

"Never waste a good crisis" has been the mantra espoused by political elites over the course of 2009

In a recent survey prepared by Allen & Overy, 69% of the senior compliance and legal executives at financial services firms across Asia noted that there is a clear need for tighter regulation of sales of structured products to the retail sector, especially in areas surrounding disclosure and suitability.

New standardized documentation for over-the-counter derivatives in Russia, combined with close-out netting legislation, could open up the market to more OTC volume.

As of the time of writing, parties to over-the-counter derivatives have no obligation under New York law or under market-standard Master Agreements to require collateral.

As the global economy begins to rise from its prone position, government officials, regulators and economists are racing to install financial reforms to ensure financial stability in the long run.

In today's economic environment, multi-national companies face uncertainties over their foreign revenues and foreign currency cash flows.