Wednesday, November 2, 2011

FOR IMMEDIATE RELEASE

Nicholas Dunbar Award Winning Financial Journalist, Author and Bloomberg Editor to Speak on OTC Derivatives Clearing at the 3rd Annual FDIC PRMIA Policy and Risk Symposium

Former CFTC Chairman Brooksley Born has documented her efforts to enlist the financial regulators in efforts to contain the systemic risk posed by opaque over-the-counter (OTC) derivatives; however, the industry insists that OTC products played a minor role during throughout the on-going financial crisis. As a reminder, the Dodd–Frank Wall Street Reform and Consumer Protection Act ("DFA") requires bilateral OTC derivatives with financial institution counterparties to be cleared on exchanges. This move to Central Counterparties (CCPs) will increase transparency around potential systemic risk, will make the derivatives market more competitive, reduce risk, and improve price discovery. As a result, these actions will clearly dig into the bid/ask spreads of dealer banks and, therefore, dilute the profitability of the large banks. DFA has been opposed by both issuers and users of derivatives due to concerns including, on the one hand, reductions in margins to issuers and, on the other, increased cash capital requirements for users hedging economic risk and facing asymmetric cash-flows from their hedges and hedged core business positions. Users also fear that lack of liquidity in some derivatives may make the promise of price discovery illusive while making front-running of large hedging operations ubiquitous. We will provide an update on where things stand relative to the current move to CCPs and seek to address overlooked areas that will impose costs such as netting, lack of inclusion of variation and maintenance margins in the rule, and CCPs as emerging "Too Big To Fail" entities that should come under Title II and, potentially, be declared Systemically Important Financial Institutions (SIFIs), as the rules are currently described.

The 3rd Annual Policy and Risk Symposium is November 7, 2011, from 7:30 a.m. to 6:00 p.m. with a reception from 6:00 p.m. to 7:00 p.m. The Symposium is conducted by the Federal Deposit Insurance Corporation's Corporate University and the Professional Risk Manager's International Association. This event focuses on current issues faced by supervisors and industry leaders, internationally active financial services firms as well as the financial services industry at large.

The Symposium is a highly interactive debate-and-confirm format allowing participants to engage industry thought-leaders on important matters of policy and risk. Symposium panelists and speakers will present fresh ideas and possible solutions to the on-going financial crisis including: Derivatives, Financial System Health, Monetary Policy and Capital Standards.

About The Federal Deposit Insurance Corporation (FDIC)

Congress created the FDIC in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,657 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars -- insured financial institutions fund its operations. For more information on the FDIC, please visit www.fdic.gov

About Professional Risk Manager's International Association (PRMIA)

PRMIA was established in 2002 as a non-profit risk management professional association. Today, PRMIA has over 75,800 members in 201 countries. PRMIA provides a wide range of risk management education and programs, and risk management certifications. For more information and brochure, please visit: http://www.prmia.org/events/view_events.php?eventID=4584

For more information please call Glen Boyls at 703-864-7046 or Lindsay Steedman at 202-912-4322.