Comments on: When pension funds shun OTC derivatives http://blogs.reuters.com/felix-salmon/2010/02/10/when-pension-funds-shun-otc-derivatives/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: DavidMerkel http://blogs.reuters.com/felix-salmon/2010/02/10/when-pension-funds-shun-otc-derivatives/comment-page-1/#comment-11916 Wed, 10 Feb 2010 21:26:20 +0000 http://blogs.reuters.com/felix-salmon/?p=2547#comment-11916 There’s another situation where derivatives can work well. The end user gives the specs, and places the big investment banks in competition against one another to provide it.

I’ve done that for clients. I works well, but you have to be willing to do the intellectual work, rather than sitting back and letting the investment banks trick you with their latest product.

It goes back to my saying, “Buy what you want or need, don’t buy what someone wants to sell you.”

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By: Sandrew http://blogs.reuters.com/felix-salmon/2010/02/10/when-pension-funds-shun-otc-derivatives/comment-page-1/#comment-11912 Wed, 10 Feb 2010 20:22:35 +0000 http://blogs.reuters.com/felix-salmon/?p=2547#comment-11912 I agree that derivatives dealers are oftentimes as sleazy as used car salesmen, particularly when they were shilling lemons as egregious as, say, CPDOs and CDPCs. And this legislative prescription is simple and sensible, provided it’s limited to the state’s public pension funds. But does it go far enough? It’s a solution only for Illinois public pensioners.

Perhaps what we need is a derivatives market-equivalent of a lemon law. The market for complex derivatives (as with used cars) possess a large potential for asymmetric information, which to me screams for intervention. Libertarians (and, of course, bankers) will cry foul, but I’m beginning to think that’s a signal of good policy.

Now that said, I’m a little taken aback by Clavell’s tone. Bankers like to fancy themselves the only ones who get it–worse actually, the only ones smart enough to possibly get it. I’m no banker, but give me a shot.

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By: br_add http://blogs.reuters.com/felix-salmon/2010/02/10/when-pension-funds-shun-otc-derivatives/comment-page-1/#comment-11906 Wed, 10 Feb 2010 16:25:05 +0000 http://blogs.reuters.com/felix-salmon/?p=2547#comment-11906 Interesting enough, the sponsor of this bill (Joyce) comes from a big trading family… they were/are active on CBOE and CBOT

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By: Beer_numbers http://blogs.reuters.com/felix-salmon/2010/02/10/when-pension-funds-shun-otc-derivatives/comment-page-1/#comment-11903 Wed, 10 Feb 2010 15:28:53 +0000 http://blogs.reuters.com/felix-salmon/?p=2547#comment-11903 I agree completely – great bill.

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