Misuse of derivative contracts caused the failure of Barings bank and the near-collapse of Long-Term Capital Management. As a result of these (and other) examples, the following things have happened:
A) All new derivatives traders will be licensed by the World Bank
B) The Federal Reserve is regulating derivatives sales over $1 million
C) Creditors and counterparties have intensified their oversight and risk analysis of derivatives activities within their financial institutions
D) All of the above none of the above

Question

Quizplus · Accepted Answer

Creditors and counterparties have indeed intensified their oversight and risk analysis of derivatives activities within their financial institutions following high-profile failures like Barings Bank and Long-Term Capital Management. This is a direct response to the risks posed by derivatives trading that were highlighted by these incidents.

Misuse of Derivative Contracts Caused the Failure of Barings Bank