Derivatives Market: Threat to Global Economy?

The Risks Posed by the Derivatives Market and the Need for Solutions

The derivatives market, which is significantly larger than the global GDP, is a ticking time bomb that could potentially trigger an economic collapse if a major financial institution goes bankrupt. This alarming situation is due to the fact that unlike traditional assets, derivatives claimants have the first claim on assets in bankruptcy. The regulatory frameworks, such as the Uniform Commercial Code, only further strengthen their position.