Template:M intro isda Party A and Party B: Difference between revisions

Template:M intro isda Party A and Party B (view source)

2 bytes added , 31 January

83,205

edits

@@ Line 83: / Line 83: @@
 Obliging dealers to [[Variation margin|cash-collateralise]] customers’ open positions creates the ''opposite'' incentives. Customers are encouraged not to diversify their risk, but to concentrate it, with the [[dealer]]s offering the most aggressive margin rates. And the dealer market is competitive to the point of being paranoid, as we learned from [[Archegos]]. Dealers will cut their required margins to the bone, thereby increasing their risk of loss.
-By contrast, [[end user]]s are ''not'' regulated. They are often thinly capitalised funds, trading with leverage on someone else’s money: guess whose’s? ''The [[dealer]]''.
+By contrast, [[end user]]s are ''not'' regulated. They are often thinly capitalised funds, trading with leverage on someone else’s money: guess who’s? ''The [[dealer]]’s''.
 The real source of systemic [[dealer]] risk is the [[Second-order derivative|second-order risk]] presented by the dealer’s ''customers'' blowing up.