The listing option
Following the banking crisis, the burden of counterparty risk has increased the need for transparency and liquidity in the structured products market. While a move to listing products and exchange-trading helps offer this, how does it affect counterparty risk, and will the trend continue? By Emma Dunkley.
Counterparty risk has caused great concern among issuers and investors of structured products in the few months following the Lehman Brothers debacle in September. The fall of the bank highlighted that even capital-guaranteed products are worthless if the issuing bank goes bust. Mitigating this counterparty risk has since occupied the minds of issuers and investors alike, although market participants are now also pushing for greater simplicity, transparency and liquidity to preclude any further
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