How to run a market

Former-derivatives-trader-turned-author Frank Partnoy wants to see tougher accounting standards and risk disclosures to deter corporate crooks. But are the regulators listening? Maria Kielmas reports

The famous US economist Myron Scholes once said that failed energy trader Enron’strading of unregulated over-the-counter energy derivatives was a new model thatwould replace the organised securities exchanges. At the time, he was workingat Long Term Capital Management (LTCM), the now-defunct Wall Street hedge fundfounded by former Salomon Brothers trader John Meriwether. The firm also employedRobert Merton, a mathematician who pioneered the development of credit risk models.LTCM traded from