We told you about Lehman Brothers Inc’s YEELDS tied loosely to the performance of Micron Technology Inc shares (CI No 2,465) and Morgan Stanley & Co issues similar PERCS, Salomon Brothers Inc has ELKS and Bear Stearns & Co has CHIPS, all tied to specific stocks, but those names are tame compared with some of the more exotic derivatives deals – names such as the Monte Carlo Simulation, the Volatility Smile Curve, Reverse Cash-&-Carry Arbitrage and Roller Coaster Swaps give a whole new meaning to the term funny money, but it looks as if the party will soon be over – according to the Daily Mail, the Group of Ten international body that watches over the banking community is advising banks that they should put an end to enormous bonuses paid to whiz-kid traders that manage to make windfall profits by off-loading billions of the things onto gullible or greedy clients, and, more importantly, that banks should not let their traders start selling any new derivative until their managers understand it…
