1Wednesday, 24 September 2008

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sean park, london,september 2008

2Wednesday, 24 September 2008Good morning all. I

d like to thank you all for being here especially given the extraordinary events transpiring in the markets and in our industry. Indeed I

d like to apologize in advance if mypresentation this morning is a bit rough around the edges...a couple weeks ago I had a great moment with technology and lost my working draft. As I started piecing it back together, manyof my original themes seemed somewhat irrelevant given the unfolding crisis. And others seemed to come to the fore.Many of the talks you heard yesterday, and those you will hear today will focus on how best to navigate the changing landscape of the financial markets - managing new and existingderivative products, leveraging the new digital market infrastructure and - inevitably - how the events of the past year might affect our markets, our customers and our industry going forward.I

m sure the many speakers and participants you meet here will provide you with valuable and practical insights and so my challenge as I saw it was how I could best use my currentperspective to help all of us think about where we go from here.

...derivatives:

3Wednesday, 24 September 2008The title of my talk in the program was “The Quest for Liquidity - Ensuring Liquidity through Derivatives”. This is a relatively broad topic and so I hope you

ll indulge my decision to approachit from first principles. A few of you might know me and a few of you might even have come across my blog at the Park Paradigm. If so, you

ll know that I am passionate about markets andin particular the power and utility of derivatives to help individuals, companies and economies to measure and manage risk, and to help optimize our society

s wealth.So it is with some anxiety and trepidation that I have been watching the current crisis unfurl. Clearly much of the behavior of the past few years was excessive, often egregious and - mostprobably - sometimes fraudulent. Equally clearly, a new regulatory and market framework is needed - not the least to rebuild trust in our markets and institutions. And yet as I read and listento the press and the politicians, it strikes me that we are running a risk of ultimately creating a much more lasting harm by focusing on the instruments and not on the underlying culture asthe cause of our current distress. At the risk of preaching to the converted, I