The Impact of EMIR on the Financial Stability – the Analysis of the Derivative Market Crises in Poland and Brazil

• Authors: Flotyński, Marcin Jan

Abstracts

EN

During the last worldwide financial meltdown between 2007 and 2009 there occurred several dysfunctions of the global financial systems. The problem raised in the article focuses on the detrimental use of derivative instruments, especially in Brazil and Poland. They create a good opportunity to check whether such regulations as EMIR could prevent firms from huge losses on options settlement or even alert them from signing contracts for ‘toxic’ derivatives. In the effect, it is remarkable if such a new law can globally contribute to the stability improvement on the derivative market. The aim of this article is to discuss the genesis of toxic derivatives and to analyse their mechanism in detail. Moreover, the article provides examples of the application of toxic derivatives, based on the data from Poland and Brazil. For this reason, a case study analysis concentrating on firms implementing such structures is applied. The article analyses the problem of the harmful use of derivative instruments both from a micro and from a macro perspective. It draws up conclusions which are important not only for small economic entities but also for larger companies and countries.

Keywords

EN

Derivatives; currency options; financial crisis; toxic derivatives; Poland; Brazil; EMIR

• Publisher: Szkoła Główna Handlowa w Warszawie. Kolegium Zarządzania i Finansów
• Journal: Journal of Management and Financial Sciences
• Year: 2015
• Volume: 20(2)
• Pages: 62-91

Dates

published

2017-09-11

Contributors

author

Flotyński, Marcin Jan