1. Key Issues?
   1. When the market is going up, competition rules
   2. Countries and markets compete with each other
   3. Companies compete with each other
      1. And don't want to be taken over
   4. Banks compete with each other
      1. Reducing risk often reduces profits
   5. When the market is going up, and everybody is making money, it is difficult to make the case for restraint
   6. Regulators may not have to power to get all of the information they need to provide full oversight of banks, etc.
   7. Regulators may not have the facilities to run timely risk scenario calculations for the entire market
2. Possible Solutions?
   1. Mandate that derivative products have not only a prospectus, but also details of how to calculate the cashflows
      1. Investment banks won't like this, it affects their ability to have a competitive advantage
      2. May require limiting sale of products for which cashflows are too difficult to calculate
      3. However, would allow 3rd parties, including regulators, to make fully informed decisions about what value and risk they would assign to those products
      4. This is about legislation, restricting the market to avoid overly risky behaviour
   2. Mandate how banks calculate risk data, and make banks send their data to regulators (daily?) for aggregation across the market
      1. Risk data volumes are huge
         1. Terabytes and more daily for large banks
      2. An XBRL model might be appropriate, as XBRL has support for multiple versions of data sets across times, regions, etc.
      3. However, it would probably not be feasible using XML; even using the most compact binary it would be a significant technical challenge
      4. This is about transparency, making sure everyone has sufficient visibility of what the products are and who is holding which combinations of products
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4. Bank
   1. InvestmentBank
      1. Comments
         1. Quants create new derivative financial products with particular characteristics that may suit particular customers
         2. Traders and Quants determining pricing and publish prospectuses about products
         3. Quants define how to calculate risk numbers for the bank's positions in any instruments it has on its books
         4. Has a business based on risk management
            1. Has to balance risk against profitability
            2. If not profitable enough, may be bought by a rival which has taken greater risks while market is going up
      2. Quant
      3. Derivative Product
         1. Mortgage Backed Security
      4. Bond
   2. Mortgage Customer
      1. "Ninja"
5. Company
6. Investor
   1. Comments
      1. Buys derivative products based on prospectuses
      2. May not be able to do own calculations on value (fair price) and risk of products
         1. May rely on the bank which sells the products
7. Market
   1. Share Market
   2. Bond Market
   3. Derivative Market
8. Regulator
   1. Comments
      1. Sets regulations for what can be traded
      2. Sets regulations for what needs to be reported
      3. May outsource some regulation to another organisation, e.g. stock exchange
      4. May do some of its own risk calculations and projections
         1. Unlikely to have facilities or data to risk calculations for entire market
      5. May be pressured to limit the amount of regulation (cost of conforming to regulations), to keep own market competitive with other markets