There were many fads in the eighties that did not catch on. Neon clothing, big shoulder pads and Wham! have passed into cultural history, however one fad has survived and thrived. Derivatives have grown from an 865.6 billion dollar market in 1987 to a 434,132.23 billion dollar market by 2011. In response to the proliferation of derivative contracts, the financial industry formed the International Swap Dealers Association (ISDA, later renamed International Swaps and Derivatives Association, Inc.). ISDA and the financial industry now face numerous challenges, as the financial crisis has increased public and regulatory scrutiny; and market conditions have made the bull markets of the 90’s a distant memory.
One area that has received attention from commentators and practitioners is conflict resolution. As a cloistered community, investment banks have been reluctant to approach the courts to adjudicate disputes with each other or with clients. However, the financial crisis has seen a blossoming of derivative litigation (much of it related to the Lehman liquidation) and thus a renewed interest in creating more options for dispute resolution. As part of this growth of interest in ADR, P.R.I.M.E. Finance (PRIME) has been established to act as an expert panel of neutrals specifically for financial dispute. Mastering the context of market practice and the specific challenges applicable to arbitration will determine if PRIME succeeds or fails.
by Sala Sihombing