Contract for differences and Systemically Important Bank: Difference between pages

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imported>Doug Williamson
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imported>Doug Williamson
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(CFD).  
(SIB).


An arrangement whereby the difference in price between two underlying securities or financial instruments (one of which could be cash) is settled in the future in cash, rather than by the delivery of the securities or instruments. 
A bank whose disorderly failure would, because of its:


Effectively the CFD is a spread bet on the outturn market price or rate.
(i) Size,
(ii) Complexity, and


(iii) Systemic interconnectedness


A CFD provides an investor with the benefits and risks of ownership of a security (or other market position) without actually owning it.
cause significant disruption to the wider financial system and to economic activity in its (main) country or region of operation.


Examples include Forward Rate Agreements (FRAs), Non-Deliverable Forwards (NDFs) and swaps.


Also known as a Contract for Difference.
For this reason, SIBs are subject to more stringent regulation and capital adequacy requirements than other institutions.




== See also ==
== See also ==
* [[Contract]]
* [[Bank]]
* [[Equity swap]]
* [[BSBY]]
* [[Forward rate agreement]]
* [[Capital adequacy]]
* [[Non-deliverable forward]]
* [[Financial institution]]
* [[Spread bet]]
* [[Global SIFI]]
* [[Swap]]
* [[Regulation]]
* [[Systemic risk]]
* [[Systemically Important Financial Institution]]  (SIFI)
* [[Too Big To Fail]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
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[[Category:Identify_and_assess_risks]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]

Revision as of 16:26, 17 March 2022

(SIB).

A bank whose disorderly failure would, because of its:

(i) Size,

(ii) Complexity, and

(iii) Systemic interconnectedness

cause significant disruption to the wider financial system and to economic activity in its (main) country or region of operation.


For this reason, SIBs are subject to more stringent regulation and capital adequacy requirements than other institutions.


See also