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NCUA Approves Final Derivatives Investment Rule

Friday, January 24, 2014 - 7:44 AM
"A final rule that will allow well-run federal credit unions to use simple derivatives to hedge against interest rate risks was approved at Thursday's National Credit Union Administration board meeting."

http://www.cuna.org/Stay-Informed...ment-rul..
4
ShorebreakShorebreak2,602 posts since
Apr 6, 2010
Rep Points: 14,080
1. Friday, January 24, 2014 - 7:45 AM
“While there’s no way of knowing for sure, estimates of the face value of all derivatives outstanding tops a quadrillion (1,000 trillion) dollars, or more than 14 times the entire world’s annual GDP. By comparison, the total value of all the stocks trading on the New York Stock Exchange is roughly $15 trillion. Indeed, the New York Stock Exchange itself is being acquired by an up-and-coming derivatives exchange. The very fact that reliable figures are hard to come by is itself part of the problem. The $638 trillion currently reported by the BIS is only a floor. Estimates for the total capital employed in derivatives trading is somewhere between $10 and $20 trillion, roughly comparable to the capitalization of the NYSE. That means that each actual dollar in the derivatives market is supporting between $35 and $70 of nominal value. Losses of only a few percent of face value therefore would be enough to wipe out even the best-capitalized derivatives traders.”

Global Economy: Derivatives May Be the Biggest Risk | TIME.com
4
ShorebreakShorebreak2,602 posts since
Apr 6, 2010
Rep Points: 14,080
2. Friday, January 24, 2014 - 7:59 AM
And the derivative does not state how much of what you own. (no paper trail). This is scary. This could have changed but I doubt it. Maybe someone working with these can post on this line. 
1
Ally6770Ally6770909 posts since
Jan 16, 2010
Rep Points: 2,639
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