Securities Derivatives

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    US financial companies still have more than a $1 trillion on their balance sheets, but analysts say they are unlike to stem the recent rally in financials.

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    Credit default swaps (CDS) will be looked at closely to ensure transparency but they aren't necessarily going to be banned, EU Financial markets commissioner Michel Barnier told CNBC.

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    While Alabama and Milan are rarely mentioned in the same breath, both locations now share something: they are making bankers nervous.

  • Luxembourgian Prime Minister Jean-Claude Juncker and German Chancellor Angela Merkel.

    Political leaders in Europe and, increasingly, the US are calling for more scrutiny of derivatives. The New York Times explains.

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    Greece is likely to formally ask the European Union for financial aid if the cost of borrowing does not fall in coming weeks and, if it doesn't get it, may go to the International Monetary Fund, Greek government officials told Dow Jones Newswires.

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    Greek leaders' overtures for far tougher curbs on credit default swaps fell largely on deaf ears in Washington, but they'll go back to Athens with some sage advice from local policy wonks: look in the mirror and don't blame market messengers for your debt woes.

  • Oil traders on the floor of the New York Mercantile Exchange, New York.

    The absence of credit default swaps could push a country's borrowing costs even higher.

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    As more details surface about how derivatives helped Greece mask their debt load, let’s not forget that the wonders of these complex products aren’t on display only overseas. Across the USA, municipalities, school districts, sewer systems and other tax-exempt debt issuers are ensnared in the derivatives mess. The New York Times explains.

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    The European Commission invited regulators, central banks, ratings agencies, fund managers and brokers for a technical meeting Friday in Brussels to discuss the fundamentals of the credit default swaps market.

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    Already, the political momentum to force meaningful changes has ebbed as banks returned to profits and bonuses last year, and broke free of government control, the NY Times reports.

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    Regulators are looking into whether investment banks deliberately sold risky derivatives, and then bet on the securities failing, the New York Times reports.

  • This former Wall Street insider is pushing hard to bring transparency to the derivatives market.

  • While at this time I don't expect a regulation bill to be ready for the President to sign this year, I believe it is likely there will be one ready before the mid-term 2010 elections next year. Again, change is coming whether it makes sense or not.

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    U.S. commercial banks earned $5.2 billion trading derivatives in the second quarter, as the level of risk eased in the global market for the complex financial instruments, according to a government report released Friday.

  • Among the many changes sparked by the Wall Street crisis, none seems more galvanizing that the call to regulate derivatives.

  • Bewrkshire Hathaway: What's the Risk?

    Berkshire Hathaway isn't happy with a Reuters story initially published with the headline, "Buffett's Berkshire: We Goofed On Derivative Risks."  Berkshire CFO Marc Hamburg tells Warren Buffett Watch, "There is no indication whatsoever in my letter to the SEC that we made an error or that we underestimated the risks of falling stock prices."

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    Warren Buffett's Berkshire Hathaway reports $1.532 billion in derivatives gains during its second quarter, contributing to an overall net profit of $3.295 billion dollars for the quarter, or $2,123 per class A share.  It's a return to profitability for Berkshire, after reporting a $1.5 billion net loss in this year's first quarter.

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    Stock market gains in April, May, and June, will energize second quarter net earnings from Warren Buffett's Berkshire Hathaway when the numbers are released after the stock market closes today.  That will be a sharp contrast from recent quarters when market losses depressed Berkshire's net numbers and its stock price.

  • George Soros

    The financial reform should include some way of separating banks' proprietary trading from commercial banking, although a return to regulation similar to the Glass-Steagall Act would be impractical, legendary investor George Soros wrote in the Financial Times.

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    Warren Buffett confirms to CNBC's Becky Quick that Berkshire Hathaway has made changes to some of its controversial bets on the long-term health of stocks.  Buffett told Becky last night by telephone that roughly $2 billion of put options on the benchmark S&P 500 stock index have been altered. Changes have also been made to a derivative on a foreign stock index, but he's not saying which one.  The new contracts have a lower strike price but cover a shorter time period.