Unchained · Wednesday, September 9, 2026
During the discussion, derivatives were characterized as tools for risk transfer rather than capital formation. While acknowledged for their historical role in managing uncertainty for producers like farmers, the conversation raised concerns about the current trend of 'derivatives for the sake of derivatives' potentially increasing systemic risk.
“One, capital formation is is critical. Derivatives don't create capital formation. It's risk transfer.”
“Now, where we're going now is like, just it's just too much. Now it's like derivatives for the sake of derivatives. Derivatives properly conceived solve real world problems. And that's where we need to stay focused.”
“And what it means, I think for, for most people, is that you're just seeing, uh, more risk being taken on in the system. But the problem is, is that the incentive structure is such that it's hard to disincentivize that.”