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Over-the-counter swaps – before and after reform

Author

Listed:
  • Michael Slonkosky

Abstract

Now that the main elements of the new regulations can be described, let?s see how a simplified trade would be typically carried out by a fictional set of institutions both before and after the reform.3 First Bank is a large dealer bank that buys and sells securities and derivatives. High Yield (HY) is a mutual fund that has a large portfolio of junk bonds. HY wants to hedge against the risk of a downturn in the junk bond market.

Suggested Citation

  • Michael Slonkosky, 2015. "Over-the-counter swaps – before and after reform," Banking Policy Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 1-5.
    • Handle: RePEc:fip:fedpbp:00001
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/2015/q4/bpr-over_the_counter_swaps.pdf
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    References listed on IDEAS

    as
    1. Acharya, Viral & Bisin, Alberto, 2014. "Counterparty risk externality: Centralized versus over-the-counter markets," Journal of Economic Theory, Elsevier, vol. 149(C), pages 153-182.
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    Cited by:

    1. Daniel R. Sanches, 2016. "The Free-Banking Era: A Lesson for Today?," Economic Insights, Federal Reserve Bank of Philadelphia, vol. 1(3), pages 9-14, July.

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