Trade in derivatives has been one of the most controversial activities in finance since the opacity around those markets was held by observers to blame for the scale and depth of the financial crisis of 2008. One of the key solutions recommended by regulators was to move trade in contracts onto exchanges, where they could be monitored more closely.
That effort showed early signs of success as the more-liquid contracts moved online but efforts to make exchange trading the default have faltered and – for many types of derivatives – actually reversed. Keep reading →
Why is oil trading so concentrated in New York and London? Why do efforts to create new exchanges in the countries where most oil is produced so regularly fail? And why does the US dollar continue to dominate trading in commodities?
In this video, one of the most prominent energy economists in the world discusses the challenges of setting up new exchanges in new currencies and in new locations and gives a succinct description of the three reasons oil trading remains concentrated in existing centers even as consumption and production of energy continues to shift around the world. Keep reading →