Skip to content

FRM Part II · FRM Exam Part II · Solvency, Liquidity and Other Regulation After the Global Financial Crisis

A risk officer reviews how Dodd-Frank Title VII changed over-the-counter derivatives markets in the US. Which description is most accurate?

Dodd-Frank Title VII generally requires standardized swaps to be centrally cleared and traded on regulated venues such as swap execution facilities, with swap transactions reported to trade repositories. Swap dealers must also register and face margin requirements, so the claims of unregulated or bilateral-only markets are wrong.

  1. AStandardized swaps must generally be cleared through central counterparties and traded on regulated venues, with all swaps reported to trade repositoriesCorrect
  2. BAll OTC derivatives must be traded bilaterally to preserve customization and be reported only to the counterparty's regulator
  3. COnly exchange-traded futures were affected, while swaps stayed fully unregulated
  4. DSwap dealers were prohibited from using collateral to reduce counterparty exposure

Explanation

Title VII required clearing of standardized swaps, trading on exchanges or swap execution facilities, and reporting to repositories, plus registration of swap dealers. The other options contradict this: swaps were brought into regulation, and collateral requirements were increased, not banned.

Did you get it right without looking?

One question tells you little. A timed set on Solvency, Liquidity and Other Regulation After the Global Financial Crisis shows your real accuracy, how long you take and where you lose marks.

Practise Solvency, Liquidity and Other Regulation After the Global Financial CrisisFree diagnostic mock

More Solvency, Liquidity and Other Regulation After the Global Financial Crisis questions