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A recent decision in the U.S. Lehman Brothers bankruptcy case held that investors in a collateralized debt obligation called Dante did not have the right to jump ahead of Lehman to get repaid, contradicting an English court decision and raising questions about how similar deals will be treated.
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The credit crunch has focused a lot of attention on bank capital ratios. With recent large write-downs in asset values, the implementation of Basel II's risk based capital requirements and the possible introduction of further changes following the Basel Committee's December consultation paper, banks face the prospect of holding increasing levels of regulatory capital as the assets they own deteriorate in both credit and rating quality.
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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.
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On Oct. 20, the European Commission published a document titled: "Ensuring efficient, safe and sound derivatives markets: future policy actions."
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Counterparty credit risk management has been evolving for over a decade from passive risk quantification and reserves to active management and hedging.
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This Learning Curve examines why central counterparties might consider permitting issuers of bonds to write credit default swaps on themselves.
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U.S. legislators are looking at how they might change the financial regulatory structure in the future, including possibly streamlining the regulation of over-the-counter derivatives to one entity.
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After so many highly-rated structured products and other financial investments were drastically marked down following the sub-prime crisis and the ensuing credit crunch, CRAs and their ratings methodologies and practices have come under intense scrutiny.
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This article highlights the importance of tail identification within a multi-dimensional setting, with a view to the wider problem of contagion modelling.
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This Learning Curve argues that, following the publication of a review by Financial Services Authority Chairman Lord Adair Turner, regulators should be focusing on a more measured approach to regulating credit default swaps--one that bears in mind the industry's proven record for collaboration and flexibility.