Return of the DPCs

They fell out of favour during the crisis, but derivatives product companies are set for a dramatic reappearance as banks seek to limit their collateral posting obligations – if regulators and counterparties can be persuaded of the benefits, that is. Lukas Becker reports

From photos of glassy lakes, alpine hillsides and snow-capped peaks to functional black-and-white text – like the rest of the financial markets, the annual report of Merrill Lynch’s derivatives product company (DPC) went through a cruel transition between 2007 and 2008. The second of those reports doesn’t even feature a logo – just words and numbers. And in later years, the numbers confirm a dramatic fall from favour: between 2008 and 2010, there was a 55% drop in the notional volume of client