2.Benefits of Credit Derivatives and the Growth
3.Credit Derivatives and the Subprime Crisis
4.Discussions about Regulations In G20
5.Current Korean Issues
The protection buyer trying to transfer the credit risk periodically pays for the premium, which is the cost for the risk, until the end of the contract.
Useful to hedge default risks
A more efficient way of risk management
Raise capitals by purchasing the insurance
Can diversify their portfolios
The leverage effect and the chance to participate in market; most of credit derivatives do not require real capital investment
★Benefits
* Reduction in systemic counterparty risk(CCP)
- multilateral netting effect
- qualifications for participants(financial soundness)
Increase in market transparency(TR)
Effective market surveillance
+ reduction in operational risk
- requirement for back office operations
★ Needs for success
- Standardized contracts
- Regulatory coordination
- Disclosure financial reporting of credit derivatives

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