Oct. 30, 2022
October 30, 2022 Hello, If a swap agreement can affect the trading of a security as much as the trading itself then it should have the same publicity. And for that matter most of other derivatives. Is common knowledge at this point that derivatives in general and swaps in particular can be used to circunvence the rules and the more complex they are the more hard they are to be understood and thus regulated, they are used to avoid the law that would otherwise be applied, is a \"legal hide\" for toxic securities and can be used as nuclear weapon to completely obliterate a security and that is when is \"well\" ( I mean well in the sense of going the way the swap contractor want its to be, not the correct way of course). When the play goes wrong in this realm of financial markets the nuclear bombs just obliterates a piece of the market and usually affects the least \"instructed investors\" or better say, the last to know which usually are the people that dont so much money. The best way to resolve this are 2 things, (1) transparency and (2) simplicity. (1) - This one is tautology the best way to avoid criminal and hazard financial behavior is to public show the trades, which can put pressure and real risk to a swap contractor since the risk of the swap are more clear to everyone else, the contractor is going to avoid too much risk with the fear of too much financial exposure ( in financial sense, not publicity sense in this case). (2) - This is not so easy to implement since it would restrict the freedom to create contracts but would avoid the comprehensive nature of this contracts ( which are on purpose of course ) and would mitigate the systemic risk, or \"wildfire spreading\" effect when one contract affects the other and you can have two completely unrelated security events affecting each other because of this derivative connection. My best regard, Peter Pan, CEO of WanderLand Incorp.