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}}{{wasteprov|Downgrading}} {{wasteprov|personnel}} is the process of finding a cheaper unit to do the same job. It is mean to save money and avoid the tiresome and messy [[human error]] that otherwise infect the flawless, crystalline system. | }}{{wasteprov|Downgrading}} {{wasteprov|personnel}} is the process of finding a cheaper unit to do the same job. It is mean to save money and avoid the tiresome and messy [[human error]] that otherwise infect the flawless, crystalline system. | ||
===Once upon a time=== | ===Once upon a time=== | ||
When the [[JC]] was but a stripling clerk, his senior partner assigned to him the job of reviewing this speculative new contract for an important finance client. This was in about 1995. | When the [[JC]] was but a stripling clerk, his senior [[partner]] assigned to him the job of reviewing this speculative new contract for an important finance client. This was in about 1995. | ||
“The client will take potentially massive, long-tenor exposures under this new contract,” said he, knocking his pipe out on the young contrarian’s head. “Potentially ruinous ones. It is our sacred duty to make sure our client is safe! And that means —” | “The client will take potentially massive, long-tenor exposures under this new contract,” said he, knocking his pipe out on the young contrarian’s head. “Potentially ruinous ones. It is our sacred duty to make sure our client is safe! And that means —” | ||
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===What does this all mean?=== | ===What does this all mean?=== | ||
Ok: enough of the cod-philosophical sci-fi. The notional amount of [[OTC]] [[derivatives]] traded | Ok: enough of the cod-philosophical sci-fi. The notional amount of [[OTC]] [[derivatives]] traded in 1995<ref>According to BIS Triennial Review, since you are asking. {{google3|BIS|Triennial|Review}}.</ref>, when I took my red pill, was roughly USD12 trillion. By 2018 it was nudging USD600 trillion<ref>According to [https://www.isda.org/a/9atME/Key-Trends-in-Size-and-Composition-of-OTC-Derivatives-Markets.pdf ISDA].</ref>. ''Six hundred trillion bucks''.<ref>I know, I know: that is gross notional and not net outstanding exposure. But still.</ref> | ||
In any case, an {{isdama}} was once a rare and special beast. Nowadays it isn’t — financial institutions negotiate thousands of them every year — and, for fifteen or twenty years [[management consultant]]s all over the globe have pored over the ''{{wasteprov|cost}}s'' of [[negotiation]] to see how to bring them down. This means some kind of [[triage]]. The [[partner]] flipped it to the [[associate]], to the [[trainee]], to the [[in-house lawyer]], to the [[ISDA negotiator]], to the operations clerk. | In any case, an {{isdama}} was once a rare and special beast. Nowadays it isn’t — financial institutions negotiate thousands of them every year — and, for fifteen or twenty years [[management consultant]]s all over the globe have pored over the ''{{wasteprov|cost}}s'' of [[negotiation]] to see how to bring them down. This means some kind of [[triage]]. The [[partner]] flipped it to the [[associate]], to the [[trainee]], to the [[in-house lawyer]], to the [[ISDA negotiator]], to the operations clerk. | ||
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{{sa}} | {{sa}} | ||
*[[Private practice]] | |||
*[[Close-out Netting]]: the [[Red Flag Act]] of finance. | *[[Close-out Netting]]: the [[Red Flag Act]] of finance. | ||
*The {{Wasteprov|great dogma of contract negotiation}} | *The {{Wasteprov|great dogma of contract negotiation}} | ||
{{ref}} | {{ref}} | ||