Letter: Ways to regulate derivatives

Stewart Price
Tuesday 28 February 1995 00:02 GMT
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From Mr Stewart Price

Sir: In the light of the collapse of Barings merchant bank, and in a regime of self-regulation of the professions - particularly in the financial world - it is incredible that the Bank of England's own regulation of the banking profession should be so woefully inadequate. The internal controls that bankers are eager to demand from their clients are clearly lacking within the major clearing banks and merchant banks, as evidenced by the massive financial disasters of recent years. Heaven only knows what havoc would be created by an independent Bank of England!

If we are to protect the rapidly diminishing standing of the City of London, the enormous potential of the derivatives market for even greater disasters must now be tackled by the Government insisting upon severe computer controls of such trading. In a derivatives market whose gearing is motivated by greed, there clearly needs to be a limit to the "upside" as well as the downside.

Yours faithfully,

STEWART PRICE

Senior Partner

Astbury & Co,

Certified Accountants

Crewe,

Cheshire

27 February

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