Fincad News
Derivatives Arms Race May Lead to Exotics Rebirth
By Nik Venema | May 10, 2016
Derivatives Arms Race May Lead to Exotics Rebirth

Banks are making a dash for faster methods to calculate derivatives prices, in a move that may presage the return of exotic derivatives that have disappeared since the financial crisis.

Many of the complex and multi-layered derivatives sold before 2007 are no longer economic because of the need to factor in the cost of funding, collateral, counterparty risk and regulatory capital.