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Strategies & Market Trends : Tech Stock Options
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To: Trey McAtee who wrote (56776)10/30/1998 4:25:00 PM
From: Stephen  Read Replies (2) of 58727
 
Trey, I worked in the international division of a large american bank (I'm british) for many years. For quite a few years I was implementing a FX & money system throughout many parts of the world. There were many places where the traders on the FX side were incorrect on their positions. As for derivatives, I believe the exposure is enourmous, but difficult to quantify by the banks. They take a good stab at managing the risk, but this is expressed as a small percentage of the principal amounts involved as they are contingent liabilities. They do not account for counter-party risk adequately in a volatile market and capital reserve requirements would be inadequate given that scenario. I have little confidence in the existing system. Given that I was working for a bank regarded as being perhaps the best in its procedural and accounting standards, I guess I am less than inspired by the current financial system as, quite frankly, I only think things have deteriorated.

Regards

Stephen
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