Coulter considers risk concentration

In a wide-ranging speech at the International Swaps and Derivatives Association annual meeting in Chicago at the end of March, the vice-chairman of JP Morgan Chase, David Coulter, considered why there were continuing questions raised over the role of derivatives and the risks associated with them when “this is a world where risk management tools are needed more than ever, and one that is well-suited for the sensible application of derivatives”.

In the speech, entitled Derivatives, risk, governance: a call to action, Coulter specifically addressed concerns about the concentration of risk among a small group of financial intermediaries – of which JP Morgan is by far the largest.

The following is an edited extract from his speech:

“Probably one of the biggest questions around systemic risk is the issue of participant exit. Does the market share of individual derivatives players lead to concern about risk in key financial intermediaries