
FSA warns of default risk
The growing use of credit derivatives and the rise of private equity mean that a large-scale default could be a much more complex and serious event in the future, according to the UK Financial Services Authority.
In a discussion paper released yesterday, the FSA said increased use of credit derivatives to repackage and reassign debt could "make it difficult to identify who ultimately owns the economic risk associated with a leveraged buyout and how these owners will react in a crisis".
The paper added: "These factors may create confusion which could damage the timeliness and effectiveness of workouts following credit events and could, in an extreme scenario, undermine an otherwise viable
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Driving IT resilience through managed services
How Murex is supporting financial institutions with managed services and providing strategic solutions
US Basel equivalence questioned as EU patience wears thin
MEPs say unfaithful US implementation of Basel III could trigger review of access to EU markets
The Term €STR transition: challenges and market readiness
The progress, challenges and factors shaping the adoption of Term €STR as financial institutions transition from Euribor
CFTC takes red pen to swaps rules, but don’t call it a rollback
Lawyers and ex-regs say agency is fine-tuning and clarifying regulations, not eliminating them
EU edges closer to calming FRTB fund-linked fray
Dealers say temporary solution is a step in the right direction but won’t fully resolve all issues
European Commission changes tune on proposed FRTB multiplier
Banks fear departure from original diversification factor undermines case for permanent relief
Supervisors should be mindful of geopolitical risks, says IMF
Shock events cause sizeable swings in asset pricing, institution’s latest report highlights
Bowman won’t commit to stress-testing the tariff shock
Nominated Fed vice-chair stonewalls calls to run ad hoc scenario similar to 2020 Covid test