Crisis drives student interest in derivatives law

Thu May 7, 2009 10:46pm EDT
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By Kristina Cooke

NEW YORK (Reuters) - Max Romanik from New Mexico went to law school to study the way auctions of luxury works of art are regulated.

But as the global financial crisis unfolded in 2008, he grew fascinated with a different obscure market: the exotic financial instruments that exacerbated a credit meltdown and triggered a painful recession.

He is not alone. Student demand for derivatives law courses has jumped worldwide since the crisis thrust these complex and largely unregulated products into the public eye and prompted governments to call for a fundamental rethink of how financial markets are overseen.

The governments of the United States and Europe are working on a raft of new rules that are expected to make derivatives more transparent, bringing with it the potential for a wealth of jobs for lawyers versed in derivatives law.

Students are hungry to decipher how derivatives contributed to the crisis and excited about the prospect of being involved in the regulatory overhaul that could lead to a new phase in the history of global finance.

Demand for seminars on the subject is booming at universities including the London School of Economics and the University of Melbourne. Stanford Law School in California is offering a course on derivatives for the first time next year.

"It's a great experience when the professor can walk in with a statute that came off the presses that day. You don't have to study bizarre hypotheticals. The real world is happening all around you right now," said Romanik, 28, who is taking a course at the University of Maryland in futures, options and derivatives law.

Romanik's initial desire to study fine arts markets stemmed from a job he held at a private equity firm with art among its assets, and was drawn to the fact that it was one of the few markets that had not yet been modernized.   Continued...

<p>Professor Michael Greenberger (R) testifies at a hearing before the U.S. House Energy and Commerce subcommittee on Oversight and Investigations on Capitol Hill in Washington, in this photo taken on June 23, 2008. Demand for the University of Maryland derivatives course has more than quadrupled since it was started in 2007 by Michael Greenberger, who worked at the Commodity Futures Trading Commission (CFTC) in the late 1990s, at a time when Washington authorities focused on deregulating financial markets. REUTERS/Nick Alexopulos/University of Maryland, Baltimore/Handout</p>