Regulation Of The Credit Default Swaps Case Study

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Register to read the introduction… At the moment the financial instruments are not as tightly regulated as insurance products securities or futures. The current consensus is that the CDS market will be subject to tighter regulation but is this really a good thing necessarily?
The right wing conservative general public feel that these products have caused enough harm to the global economy and should be completely banned and suspended the market from trading anymore. This is a view also shared by the European authorities as they feel that the speculators on the market are buying too many Default swaps on Greece. I believe the default swaps should be allowed on Greece, however only in the case to hedge against buying Greek bonds. I believe the naked CDS market is too important to the global economy. However the securities these companies deal with should be made transparent. I feel the volume they trade in is ok as long as the shareholders money is being invested wisely, that is the part of regulation I feel should be implemented, as regulation may cause harm unless it is in the best interests of the economy in the long term and not just seen as a short term economic policy. Although the naked CDS market accounts for over 80% of the CDS market I feel that hedge funds and money managers may be allowed to invest. If the regulator bodies were merged with bank and government I feel that would allow banks to invest in these securities if the firm were to report to a body on a regular basis. I believe we will also have to look out for the BRIC economies in this market as it is estimated for 2012 they will be importing more than rich countries in
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The tranches which appear from this investment class need to be eliminated in my opinion; I feel the subordinating bonds which allow the senior bondholders being absolved of blame is just setting firms up to default. I feel there should be a uniform price for what should be paid for these bonds and limit the quantity which can be purchased per year and over periods, this will allow people to diversify one’s portfolio and allow the cash to be in other assets. One primary reason will allow credit markets to function efficiently and also allow investors to limit losses along with profits; I feel the losses which people can make on these assets needs to be imposed more in the contracts as many people were unaware of these losses throughout the

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