Many of London's currency dealers have retooled themselves to trade more sophisticated products, such as interest-rate swaps and forward rate agreements.
Insiders say the biggest exposure may be in the interest-rate swaps market, which is many times larger than those for credit derivatives.
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Areas such as interest-rate swaps and foreign-exchange trading incur large fixed costs.
Further evidence that the mortgage giants were mostly responsible for the sharp rise in yields can be found in the interest-rate swaps market.
The cme Group is going up against its own customers--banks like Barclays, jpmorgan and Merrill Lynch, that is--by introducing over-the-counter derivatives, including interest-rate swaps.
Understandably, bottom lines aren't as robust as in prior years, in part due to slips in utilization, declines in investments and, in some cases, losses on interest-rate swaps.
Duffy and Donohue argued that the two exchanges rarely competed directly, and that their chief competition wasn't other futures markets but the vastly larger markets in over-the-counter derivatives like interest-rate swaps.
Another reason demand for the long bond has been so voracious is that a lot of investment banks still use them to hedge their corporate-bond positions and interest-rate swaps (between fixed- and floating-rate obligations).
The decision by the Fed to offer emergency liquidity to Bear Stearns and to facilitate its acquisition by JPMorgan Chase had less to do with the size of Bear's balance-sheet than with its central role in markets for credit-default and interest-rate swaps.
The cme Group is going up against its own customers--banks like Barclays (nyse: BCS - news - people ), jpmorgan and Merrill Lynch (nyse: MER - news - people ), that is--by introducing over-the-counter derivatives, including interest-rate swaps.
Barclays has also been caught up in another investigation, relating to the mis-selling of complex financial products - interest rate swaps - to small businesses.
As Forbes first reported in February, Harvard's fully invested and overly illiquid endowment, coupled with the use of interest-rate and total-return swaps, caused Mendillo to scramble for cash last fall.
Now there's the mis-selling of interest rate swaps, mainly to businesses, but also to some 'non-sophisticated' retail customers.
Yields on Mexican short-term interest rate swaps were little changed after the minutes as investors stuck to bets that rates will remain on hold into 2014.
These principles were in place all the way through the LIBOR scandal, the mis-selling and interest rate swaps.
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In practice, some of these swaps or interest-rate hedging products increased the borrowing costs of struggling companies or prevented them from taking advantage of the sharp fall in interest rates since 2008.
All cleared OTC derivatives will be available including interest rate swaps, credit default swaps, energy swaps, non-deliverable forwards and equity swaps.
Separately, RBS is having to pay compensation for two mis-selling scandals: mis-selling payment protection insurance, and mis-selling specialist insurance called interest rate swaps to small businesses.
Like other banks, Barclays was heavily involved in manipulating LIBOR and in the mis-selling of payment protection insurance and interest rate swaps.
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Mr Miliband's comments come a day after it emerged that four banks had mis-sold specialist insurance, known as interest rate swaps, to small businesses.
Universities and not-for-profit hospitals around the country that had entered into interest rate swaps have been forced also to post collateral.
Take, for example, one indicator of the market's appetite for risk, the spread between swaps of fixed- and floating-rate interest payments (see chart).
Actions such as selling credit default swaps based on rotten loans, money laundering, interest rate manipulation, and excessive risk-taking can be as objectively determined as financial restatements.
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