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Dan Awrey, Associate Professor of Law and Finance in the Oxford Law Faculty worked with the Federal Reserve Bank of Chicago to change the way policymakers – and central banks in particular – view the importance of law, and why it matters to financial stability.

In finance, derivatives are contracts whose values depend upon or are derived from underlying assets, such as stocks, bonds, commodities, currencies, interest rates and market indexes.  Some derivatives are traded through a central exchange, while others, called over-the-counter (OTC) derivatives, are negotiated between two parties without going through an exchange or other intermediary. 

One of the centrepieces of the G20’s post-financial crisis policy agenda has been to extend financial regulations to include over-the-counter derivatives markets, and so G20 members are currently engaged in the complex process of designing and implementing reforms.  Dan Awrey, Associate Professor of Law and Finance in the Oxford Law Faculty together with researchers from Columbia University and the University of Notre Dame as well as the Federal Reserve Bank of Chicago organised a workshop to examine the legal arrangements for cross-border resolution and liquidity within OTC derivatives markets. The principal objective of the workshop was to bring together academics, financial policymakers and market participants to explore in depth the importance of the law in supporting – and, potentially, undermining – liquidity and resolution of both dealers and clearinghouses within OTC derivatives markets. 

The workshop was held in June, 2014 at the Federal Reserve Bank of Chicago.  It attracted a wide range of participants from universities around the United States as well as other organisations including the International Swaps and Derivatives Association, JP Morgan, the Intercontinental Exchange Group, the Federal Deposit Insurance Corporation, and the Federal Reserve Bank of Chicago. 

By all accounts, the workshop was extremely successful.  One participant, a finance scholar, wrote that it “was one of the most intellectually stimulating workshops I have attended.”  Several others wrote to say that bringing together scholars, policymakers, and market professionals in more a structured environment was highly constructive.  Professor Awrey and his team hope to hold similar discussions in the UK and the EU in the near future.  In this way, they hope to change the way policymakers – and central banks in particular – view the importance of law, and why it matters to financial stability.

This project was funded by Oxford's ESRC Impact Acceleration Account.

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