Derivatives. Speculation, Hedging, and Economic Efficiency in US Common Law

      Аннотация: Derivatives are an undeniably important part of today’s financial markets. There is significant debate about their effects on the economy with overwhelming uncertainty regarding appropriate legal responses. This book argues that centuries-old restrictions on speculative derivatives developed in Irwin v Williar are not justifiable. Moral interpretations from the time show little understanding of these financial instruments. An analysis based on neoclassical economics reveals US common law’s hostile stance against speculative derivatives to make the economy highly inefficient. This study will point out that speculative derivatives ensure the stability of competitive equilibrium through market completion, price discovery, and price stabilisation. US common law’s insistence upon delivery of the underlying product to settle the derivatives contract should be abolished. It will be proposed that incentives for efficient replicating portfolio management ? la Black-Scholes should be created.

Ключевые слова: Competitive equilibrium, derivatives, Economic efficiency, economics, Financial Markets, Financial Regulation, hedging, law and economics, markets, neoclassical economics, Pareto optimality, price discovery, price stabilisation, Speculation, Volcker Rule, Irwin v Williar, US Common Law, Market Completion, States of the World, Virtual State of the World, Black-Scholes