Godfried De Vidts President, ACI
Godfried De Vidts President, ACI

This time we have been lucky!

Godfried De Vidts looks at the lessons learned from the recent Refco case.

In our financial industry we are often challenged by events. Last time I wrote about the July 7 events in London and the resilience of our professionals and community at large. And indeed, the numerous events that have rocked the financial worldwide system have provided improvements in the way we deal with external events. As former Federal Reserve official Gerald Corrigan reported in a bank-sponsored post-mortem on LTCM, improvements in the financial worlds handle on market and credit risks are noticeable. However, operational risks resulting from the rapid rise in the use of credit derivatives and other financial innovations since LTCM’s fall could spiral out of control.This year the market absorbed the down grading of General Motors and Ford without too much fuss. The ISDA June 2005 survey cited important advances. Although only 40% of credit-derivative contracts are now confirmed by automated systems, up from 24 % a year ago, it is still less than half. And then Refco came. This firm that...continued

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