MTM gains - Who are the winners?

Radiantsoul

Banks and secondary financial institutions are booking large mark to market losses on their trading.

But derivative trading is a zero sum game. Any impaired derivatives are written down in the purchasers books, but whoever writes the derivate gains. Across the world(and on a mark-to-market basis) derivative balances net to zero.

So somewhere there must be larger gains being made in writing the now severly impaired CDOs and other toxic assets. Where are these gains?

Generali

Radiantsoul wrote: »

Banks and secondary financial institutions are booking large mark to market losses on their trading.

But derivative trading is a zero sum game. Any impaired derivatives are written down in the purchasers books, but whoever writes the derivate gains. Across the world(and on a mark-to-market basis) derivative balances net to zero.

So somewhere there must be larger gains being made in writing the now severly impaired CDOs and other toxic assets. Where are these gains?

The gains from CDOs would be in people who have lived rent free prior to eviction.

Derivatives don't all net to zero AIUI. What makes you think they should?

Radiantsoul

There is a buyer and a seller gains on one offset losses on the other.
The physical asset underlying the derivative contract may become impaired as you say and the gain flows to the evictee(and legal fees). But a derivative is a sort of side bet on the real outcome.