Should Derivitives Markets Be Regulated?
My understanding is that there's lots of trading of interest rate hedging derivitives likes swaps and caps. For one I know Fannie and Freddie use them. I lot of mortgage backed securities are issued (it's a bigger market than US treasuries) that have derivitives utilized in the securitization process. My understanding is that there is no regulation of these markets for interest rate hedging derivitives. Should there be? Not completely sure what regulation could do to insure that some sort of meltdown doesn't take place.
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