Derivatives Don't Cause Market Crises, People Do
After the Nasdaq whale and GameStop, the implosion at Archegos suggests the balance between freedom and regulation needs further refinement.
Financial weapons need regulation too.
Photographer: Scott Olson/Getty Images
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As with guns, so with equity derivatives. Two mass shootings this month have brought back the eternal American issue over how to limit gunshot deaths while maintaining the Second Amendment’s promise not to infringe the right to bear arms. And in the markets, another accident, in which a big investor called Archegos Capital Management is imploding after using derivatives to obscure how much risk it was taking in just a few stocks, brings back the issue of how to control financial innovation while maintaining a free market.