Oct. 31, 2022
October 31, 2022 Swaps can be used to hide both short and long positions. If swaps are used across multiple prime brokerages it is possible to leverage a massive position without your counterparties being aware of the risk. An efficient market requires transparency for true price discovery to occur. Perhaps one day soon we'll have a blockchain based system that puts all the cards on the table. Until that happens, requiring daily reporting of swap positions and substantial penalties for reporting errors would dramatically improve the transparency and quality of our markets.