- Credit risk — Derivatives — Financial stability
This chapter traces the emergence of concerns about legal and conduct risk. From around the time of the first major UK privatization share issues of the 1980s, the history of the financial markets has featured a number of significant developments that have tended to bring concern about legal risk to the fore, albeit in specific contexts. These include the growth of global markets, the arrival of ‘universal’ banks (whose business involves much more than banking, as traditionally understood), and the huge expansion of markets in instruments commonly known as ‘derivatives’ and other highly structured financial products. Although such developments have brought benefits, they have also increased the complexity of financial activity. Many argue that these directly contributed to the underlying causes of the recent global financial crisis.
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