UNIVERSIDAD DE LA SABANA MERCADO DE DIVISAS Y DERIVADOS DIANA PARRA GRAU 200720793

PRESS ARTICLE ARTICLES:

Irish Central Bank says rules designed to kill OTC market: http://www.hedgefundsreview.com/hedge-funds-review/news/2223938/irishcentral-bank-says-rules-designed-to-kill-otc-market http://www.investorwords.com/1421/derivative.html. http://www.investorwords.com/3518/OTC.html http://beginnersinvest.about.com/od/stocksoptionswarrants/a/what-is-aderivative.htm

REPORT: According to the sources, Giuseppe Insalaco, senior adviser on clearing and settlement regulation at the Central Bank of Ireland has expressed that the new derivatives regulation adopted by rule makers will bring an ice age to derivatives market, because they introduce a new credit valuation adjustment capital charge that will increase the cost of trading derivatives significantly. As we know, a derivative is a financial instrument whose characteristics and value depend on the characteristics and value of an underlier, like a commodity, bond, equity or currency. In other words, a derivative is financial product whose value is based on the price of an asset. In this case, statements could bring chaos to derivatives market, because it could involve a lot of uncertainty to OTC transactions. In summary, it is very dangerous for todays global economy that governments measures dont be clear and well planning. New derivative market regulations announced by the Ireland Central Bank speak about a new scenario that markets dont know, so uncertainty is growing all around and chaos is here to stay. Although derivatives can help make the economy function by reducing risk for farmers, oil companies, startup employees, and more, left unchecked, they can introduce big risks for entire financial system.

VOCABULARY: Derivative: This is a kind of financial instrument whose characteristics and value depend on the characteristics and value of an underlier, like a commodity, bond, equity or currency. Derivative Market: A financial market that deals with the trading of derivatives. Derivatives can be traded through futures or Over-the-Counter. OTC: Over-the-Counter, is a security which is not traded on an exchange, usually due to an inability to meet listing requirements.