Re: "There is a little known Govt agency that polices the derivatives market."
There is no such thing as a single form of 'derivative' (practically EVERY financial product is technically a 'derivative', even plain and simple Certificates of Deposit sold by a bank, since they are 'derived' from some other things... so I have no idea what government agency you are referring to.
But I can ASSURE YOU that there is no such thing as a government agency that 'polices the derivatives market'... since there is no such market.
Many, many different markets, and many, many different types of derivatives (CDs as I mentioned are 'derivatives', so are all options, futures, index-based products, the list of "things that are derivatives" is probably too long to make), and many, many different agencies and/or industry self-policing organizations that are assigned regulatory responsibility for various "derivatives"....
However, the form of derivatives that I think is MOST responsible for the global financial crisis, panic, and collapse is CREDIT DEFAULT SWAPS. (A multi-TRILLION Dollar market that no one 'regulates'. In fact, the Congress *banned* all regulation of the CDS markets back in the 'nineties... lead by Phil Gramm and Joe Lieberman and Alan Greenspan and Senator Dodd and other fools.)
How it all blew-up:
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