About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

10 Pratt's J. Bankr. L. 242 (2014)
REIT Shares/Interests Are Derivatives Instrument and REITs Are Non-Bank SIFIs

handle is hein.journals/prattjb10 and id is 248 raw text is: REIT Shares/Interests Are Derivatives Instruments and REITs Are Non-Bank SIFIs MICHAEL 1.C.NWOGUGU The author of this article explains the symbiotic relationsships among interest rates, bankruptcy, and real estate investment trusts (RETs) and discusses why REITs are major causes of and transmitters of systemic risk. The U.S. Financial Stability Oversight Council's (FSOC) criteria for identifying systemically important financial institutions (SIFIs) are inaccurate and are likely to result in false positives and false nega- tives. While real estate investment trusts (REITs) have evolved in many countries and new REIT statutes (both supplemental and enabling statutes) were enacted in many countries within the last 15 years, REITs are inherently inefficient. This article explains why medium/large REITs are major causes for and transmitters of systemic risk, and thus are SIFIs. More importantly, while REITs are clearly derivatives, they are not subject to derivatives regu- lations in most countries - and, as a result, REITs can increase inefficiency and volatility in at least six markets. REIT SHARES/INTERESTS ARE DERIVATIVE INSTRUMENTS REIT shares/interests are essentially derivatives instruments because: the value of REIT shares/interests is partly based on the value of the un- derlying intangible financial assets (i.e. real estate leases and/or mortgages Michael Nwogugu is an author, entrepreneur, and adviser. He may be contacted at mcn2225@gmail.com. 242

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most