Derivatives | featured news

This is something that all financial economists know and something that just about everyone else disagrees with them on. Having derivatives in a market helps to stabilise prices in that market: Some say that the recent rise of more advanced bitcoin-related financial services, including hedge funds, futures, and derivatives markets, could help stabilize the future of Bitcoin. This week, a soon-to-launch New York-based “leveraged forex trading platform” for Bitcoin, called Coinsetter, announced that it had received $500,000 in venture capital.

...Today, as individual investors buy and sell common stocks less and less, the transaction symbolizes the rapidly advancing utilization of vehicles that are too esoteric for the general public to comprehend– futures contracts and options on the direction of interest rates, or oil and natural gas prices, or metals and agricultural products like wheat and corn, or precious metals like gold and silver, and especially credit instruments like mortgages and bank loans.

So just when we thought we had heard all about the threats the hazardous use of derivatives could unleash on to the economy, a leading bank [Morgan Stanley] apparently managed to find a new way to use them, this time to help gouge consumers of more than $150 million.

Jamie Dimon, the chief executive of JPMorgan Chase, is testifying on Capitol Hill about a failed derivatives trade that could cost the bank as much as $5 billion in losses.

Last week, the once-future Treasury secretary and current JPMorgan Chase CEO Jamie Dimon revealed a $2 billion loss. This previously undisclosed derivative trade should be a wake-up call for those claiming that finance has been “reined in” and no longer presents a threat to the global economy.

MetLife said it swung to a loss on increased derivative losses, releasing the preliminary results nearly two weeks ahead of schedule after inadvertently posting some quarterly data on its website late Wednesday.

Berkshire Hathaway Inc. said fourth- quarter profit fell 30 percent on smaller gains from Warren Buffett’s portfolio of derivatives.

Gabe Sherman argues that Dodd-Frank has already ended Wall Street as we know it. So how did MF Global go up in flames last year? The brokerage firm’s bankruptcy was mostly the outcome of failed, risky bets it placed through complex derivatives, and it lost an estimated $1.2 billion of its customers’ money in the process.

Lawmakers were locked in an impasse over derivatives on Thursday as they struggled to finish their historic rewrite of U.S. financial regulations.

Morgan Stanley shares dropped Wednesday following a report that the investment bank is facing an investigation into mortgage derivative deals.