Much of the shift in attitude toward derivatives has occurred because “ problems” with derivatives are correctly seen as arising in the behavior of the parties entering into the contracts rather than in the contracts themselves. Perspectives on Asia Events in Asia are providing a test of more than just attitudes toward derivatives.
Turmoil in these markets also has provided an important test of the risk management processes that OTC derivatives dealers have put in place and the infrastructure supporting those systems. The jury is still out in some respects, but preliminary reports of how U.S. banks have fared provides valuable insights and lessons.