Derivatives users slow to learn crisis lessons

If proof were needed that history is doomed to repeat itself, it came recently in the form of a study into how end-users manage the derivatives they buy. After the collapse of three of the market’s biggest counterparties Bear Stearns, Lehman Brothers and AIG most people might expect that the buy-side has wised up. Once bitten, twice shy, right

Wrong, apparently. When BNY Mellon asked a group of clients recently if they had the capability to price the over-the-counter derivatives contracts they had entered into, just 40% said yes. Without that ability, most have to rely on counterparties to value their collateral for them. “That’s a really bad thing to...