Research Center Events

Salomon Center and Nasdaq OMX Derivatives Research Project Host Event on the Future of Derivatives

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NYU Stern Salomon Center, in partnership with Nasdaq OMX, recently hosted an all-day conference discussing the future of derivatives. New research in the area was presented by Stern faculty and faculty from other schools including Columbia Business School and UCLA. Panels featured renowned economists and some of the financial industry’s leading practitioners including Eric Dinallo, former superintendent of the New York State insurance department and visiting professor at NYU Stern; Robert Shiller, Yale University; Myron Scholes, Platinum Grove Asset Management; James Overdahl, Securities and Exchange Commission; and Eric Noll, Executive Vice President of Nasdaq OMX.

Professors Matthew Richardson and Stephen Figlewski welcomed the audience and introduced the morning research presentation sessions.

Panelist Points of View: “Rethinking Derivatives in the Real World”

  • NYU Stern Visiting Professor Eric Dinallo argued that regulation should be the same for all functionally equivalent positions, regardless of whether derivatives are involved.
  • Robert Shiller discussed how the crisis has given us new opportunities to create derivatives and markets that work better for managing the risks faced by ordinary people.
  • NYU Stern Professor of Finance Viral Acharya described how derivatives have often been used to increase leverage through regulatory arbitrage, rather than for risk management.

Panelist Points of View: “Future of the Derivatives Marketplace”

  • Myron Scholes said liquidity is a critical factor in how securities are actually priced in the market. Holding liquidity is an option, that can be valued like other options, and choosing how much is needed is essential for rational business decisions.
  • Eric Noll said that the Nasdaq strongly supports centralized clearing. Such markets attract more diverse participants which makes them more robust.
  • James Overdahl described the practical challenges regulators will face in moving OTC derivatives to centralized clearing, and in harmonizing the activities of the SEC and the CFTC.