by Aradhana Nair
On February 2, Christian Johnson, a professor of law at the S.J. Quinney College of Law, will address The National Centre for Business Law at the University of British Columbia on “Derivatives, Lehman Brothers and Global Systemic Risk.”
On September 15, 2008, Lehman Brothers filed for bankruptcy and it was the largest in U.S. history. At the time, Lehman had over 900,000 open over-the-counter contracts. The $455 trillion global derivatives market felt the tremors and feverishly engaged in a swift trading session to mitigate the damage. This episode revealed the fragility of the global financial structure in the absence of strict and standard regulation of credit derivatives, and how current risk-monitoring systems were ineffectual in this case.
As noted in the brochure, Professor Johnson “will discuss the termination and unwinding of Lehman’s derivative book and the systemic risks that it presented to global markets. [He] will then analyze the efforts of regulators and counterparties to minimize the financial repercussions of such a failure and conclude with a discussion of future reforms.”