Derivative (finance) - Knowledge (XXG)

2507:. Margins, sometimes set as a percentage of the value of the futures contract, need to be proportionally maintained at all times during the life of the contract to underpin this mitigation because the price of the contract will vary in keeping with supply and demand and will change daily and thus one party or the other will theoretically be making or losing money. To mitigate risk and the possibility of default by either party, the product is marked to market on a daily basis whereby the difference between the prior agreed-upon price and the actual daily futures price is settled on a daily basis. This is sometimes known as the variation margin where the futures exchange will draw money out of the losing party's margin account and put it into the other party's thus ensuring that the correct daily loss or profit is reflected in the respective account. If the margin account goes below a certain value set by the Exchange, then a margin call is made and the account owner must replenish the margin account. This process is known as "marking to market". Thus on the delivery date, the amount exchanged is not the specified price on the contract but the 3161:

curtail speculation with derivatives, especially for "systemically significant" institutions whose default could be large enough to threaten the entire financial system. At the same time, the legislation should allow for responsible parties to hedge risk without unduly tying up working capital as collateral that firms may better employ elsewhere in their operations and investment. In this regard, it is important to distinguish between financial (e.g. banks) and non-financial end-users of derivatives (e.g. real estate development companies) because these firms' derivatives usage is inherently different. More importantly, the reasonable collateral that secures these different counterparties can be very different. The distinction between these firms is not always straight forward (e.g. hedge funds or even some private equity firms do not neatly fit either category). Finally, even financial users must be differentiated, as 'large' banks may classified as "systemically significant" whose derivatives activities must be more tightly monitored and restricted than those of smaller, local and regional banks.

1598:). One common form of option product familiar to many consumers is insurance for homes and automobiles. The insured would pay more for a policy with greater liability protections (intrinsic value) and one that extends for a year rather than six months (time value). Because of the immediate option value, the option purchaser typically pays an up front premium. Just like for lock products, movements in the underlying asset will cause the option's intrinsic value to change over time while its time value deteriorates steadily until the contract expires. An important difference between a lock product is that, after the initial exchange, the option purchaser has no further liability to its counterparty; upon maturity, the purchaser will execute the option if it has positive value (i.e., if it is "in the money") or expire at no cost (other than to the initial premium) (i.e., if the option is "out of the money"). 3123:, or risk arising from the other party in a financial transaction. Counterparty risk results from the differences in the current price versus the expected future settlement price. Different types of derivatives have different levels of counter party risk. For example, standardized stock options by law require the party at risk to have a certain amount deposited with the exchange, showing that they can pay for any losses; banks that help businesses swap variable for fixed rates on loans may do credit checks on both parties. However, in private agreements between two companies, for example, there may not be benchmarks for performing due diligence and risk analysis. 2997:(IMF), "... it may well be that the managers of these firms have figured out the correlations between the various instruments they hold and believe they are hedged. Yet as Chan and others (2005) point out, the lessons of summer 1998 following the default on Russian government debt is that correlations that are zero or negative in normal times can turn overnight to one – a phenomenon they term "phase lock-in". A hedged position "can become unhedged at the worst times, inflicting substantial losses on those who mistakenly believe they are protected". See the 2459:), forward contracts specification can be customized and may include mark-to-market and daily margin calls. Hence, a forward contract arrangement might call for the loss party to pledge collateral or additional collateral to better secure the party at gain. In other words, the terms of the forward contract will determine the collateral calls based upon certain "trigger" events relevant to a particular counterparty such as among other things, credit ratings, value of assets under management or redemptions over a specific time frame (e.g., quarterly, annually). 2875: 3193: 1637:

price specified in the contract (thereby losing additional income that he could have earned). The miller, on the other hand, acquires the risk that the price of wheat will fall below the price specified in the contract (thereby paying more in the future than he otherwise would have) and reduces the risk that the price of wheat will rise above the price specified in the contract. In this sense, one party is the insurer (risk taker) for one type of risk, and the counter-party is the insurer (risk taker) for another type of risk.

1644:, a stock that pays dividends, and so on) and sells it using a futures contract. The individual or institution has access to the asset for a specified amount of time, and can then sell it in the future at a specified price according to the futures contract. Of course, this allows the individual or institution the benefit of holding the asset, while reducing the risk that the future selling price will deviate unexpectedly from the market's current assessment of the future value of the asset. 3108:'s 2002 annual report. Buffett called them 'financial weapons of mass destruction.' A potential problem with derivatives is that they comprise an increasingly larger notional amount of assets which may lead to distortions in the underlying capital and equities markets themselves. Investors begin to look at the derivatives markets to make a decision to buy or sell securities and so what was originally meant to be a market to transfer risk now becomes a leading indicator. 2320:; the payment received is usually substantially less than the face value of the loan. Credit default swaps have existed since the early 1990s, and increased in use after 2003. By the end of 2007, the outstanding CDS amount was $ 62.2 trillion, falling to $ 26.3 trillion by mid-year 2010 but reportedly $ 25.5 trillion in early 2012. CDSs are not traded on an exchange and there is no required reporting of transactions to a government agency. During the 64: 3256:, through its "Global Trade Repository" (GTR) service, manages global trade repositories for interest rates, and commodities, foreign exchange, credit, and equity derivatives. It makes global trade reports to the CFTC in the U.S., and plans to do the same for ESMA in Europe and for regulators in Hong Kong, Japan, and Singapore. It covers cleared and uncleared OTC derivatives products, whether or not a trade is electronically processed or bespoke. 1360:" by providing offsetting compensation in case of an undesired event, a kind of "insurance") or for speculation (i.e. making a financial "bet"). This distinction is important because the former is a prudent aspect of operations and financial management for many firms across many industries; the latter offers managers and investors a risky opportunity to increase profit, which may not be properly disclosed to stakeholders. 2451:. Forward contracts are very similar to futures contracts, except they are not exchange-traded, or defined on standardized assets. Forwards also typically have no interim partial settlements or "true-ups" in margin requirements like futures—such that the parties do not exchange additional property securing the party at gain and the entire unrealized gain or loss builds up while the contract is open. However, being traded 936: 1510: 1123: 2224:(Example: "The capital market in which asset-backed securities are issued and traded is composed of three main categories: ABS, MBS and CDOs".)—and sometimes for a particular type of that security—one backed by consumer loans (example: "As a rule of thumb, securitization issues backed by mortgages are called MBS, and securitization issues backed by debt obligations are called CDO, 6763: 924: 3268:: A legally enforceable arrangement between a bank and a counter-party that creates a single legal obligation covering all included individual contracts. This means that a bank's obligation, in the event of the default or insolvency of one of the parties, would be the net sum of all positive and negative fair values of contracts included in the bilateral netting arrangement. 2596:(French for "slices"), each with a different level of priority in the debt repayment stream, giving them different levels of risk and reward. Tranches—especially the lower-priority, higher-interest tranches—of an MBS are/were often further repackaged and resold as collaterized debt obligations. These subprime MBSs issued by investment banks were a major issue in the 2522:, both parties of a futures contract must fulfill the contract on the delivery date. The seller delivers the underlying asset to the buyer, or, if it is a cash-settled futures contract, then cash is transferred from the futures trader who sustained a loss to the one who made a profit. To exit the commitment prior to the settlement date, the holder of a futures 1648: 2237:, which "catch" the cash flow of interest and principal payments in sequence based on seniority. If some loans default and the cash collected by the CDO is insufficient to pay all of its investors, those in the lowest, most "junior" tranches suffer losses first. The last to lose payment from default are the safest, most senior tranches. Consequently, 5421: 2581:, or they can be "private-label", issued by structures set up by investment banks. The structure of the MBS may be known as "pass-through", where the interest and principal payments from the borrower or homebuyer pass through it to the MBS holder, or it may be more complex, made up of a pool of other MBSs. Other types of MBS include 3230:(Australia, Canada, the European Union, Hong Kong, Japan, and Switzerland) it found comparable to its own rules, thus permitting non-US swap dealers, major swap participants, and the foreign branches of US Swap Dealers and major swap participants in these jurisdictions to comply with local rules in lieu of Commission rules. 3246:(EMIR) in Europe, as well as regulations in Hong Kong, Japan, Singapore, Canada, and other countries. The OTC Derivatives Regulators Forum (ODRF), a group of over 40 worldwide regulators, provided trade repositories with a set of guidelines regarding data access to regulators, and the Financial Stability Board and CPSS 2518:. A forward is like a futures in that it specifies the exchange of goods for a specified price at a specified future date. However, a forward is not traded on an exchange and thus does not have the interim partial payments due to marking to market. Nor is the contract standardized, as on the exchange. Unlike an 2264:) tranches recycled from other asset-backed securities, whose assets were usually non-prime mortgages. These CDOs have been called "the engine that powered the mortgage supply chain" for nonprime mortgages, and are credited with giving lenders greater incentive to make non-prime loans leading up to the 2007-9 3226:

application of inconsistent and duplicative rules. At the same time, they noted that "complete harmonization – perfect alignment of rules across jurisdictions" would be difficult, because of jurisdictions' differences in law, policy, markets, implementation timing, and legislative and regulatory processes.

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A derivative is a financial contract whose value is derived from the performance of some underlying market factors, such as interest rates, currency exchange rates, and commodity, credit, or equity prices. Derivative transactions include an assortment of financial contracts, including structured debt

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in an MBS is not paid back as a single payment to the bond holder at maturity but rather is paid along with the interest in each periodic payment (monthly, quarterly, etc.). This decrease in face value is measured by the MBS's "factor", the percentage of the original "face" that remains to be repaid.

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While the futures contract specifies a trade taking place in the future, the purpose of the futures exchange is to act as intermediary and mitigate the risk of default by either party in the intervening period. For this reason, the futures exchange requires both parties to put up an initial amount of

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Derivatives trading of this kind may serve the financial interests of certain particular businesses. For example, a corporation borrows a large sum of money at a specific interest rate. The interest rate on the loan reprices every six months. The corporation is concerned that the rate of interest may

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to exchange a specified amount of cash for a specified amount of wheat in the future. Both parties have reduced a future risk: for the wheat farmer, the uncertainty of the price, and for the miller, the availability of wheat. However, there is still the risk that no wheat will be available because of

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of an asset. This also provides a considerable amount of freedom regarding the contract design. That contractual freedom allows derivative designers to modify the participation in the performance of the underlying asset almost arbitrarily. Thus, the participation in the market value of the underlying

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In the U.S., by February 2012 the combined effort of the SEC and CFTC had produced over 70 proposed and final derivatives rules. However, both of them had delayed adoption of a number of derivatives regulations because of the burden of other rule-making, litigation and opposition to the rules, and

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For legislators and committees responsible for financial reform related to derivatives in the United States and elsewhere, distinguishing between hedging and speculative derivatives activities has been a nontrivial challenge. The distinction is critical because regulation should help to isolate and

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OTC represents the biggest challenge in using models to price derivatives. Since these contracts are not publicly traded, no market price is available to validate the theoretical valuation. Most of the model's results are input-dependent (meaning the final price depends heavily on how we derive the

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Gross negative fair value: The sum of the fair values of contracts where the bank owes money to its counter-parties, without taking into account netting. This represents the maximum losses the bank's counter-parties would incur if the bank defaults and there is no netting of contracts, and no bank

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for market participants. They also agreed on the need to reduce regulatory uncertainty and provide market participants with sufficient clarity on laws and regulations by avoiding, to the extent possible, the application of conflicting rules to the same entities and transactions, and minimizing the

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For exchange-traded derivatives, market price is usually transparent (often published in real time by the exchange, based on all the current bids and offers placed on that particular contract at any one time). Complications can arise with OTC or floor-traded contracts though, as trading is handled

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of money. If the interest rate after six months is above the contract rate, the seller will pay the difference to the corporation, or FRA buyer. If the rate is lower, the corporation will pay the difference to the seller. The purchase of the FRA serves to reduce the uncertainty concerning the rate

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Gross positive fair value: The sum total of the fair values of contracts where the bank is owed money by its counter-parties, without taking into account netting. This represents the maximum losses a bank could incur if all its counter-parties default and there is no netting of contracts, and the

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The true proportion of derivatives contracts used for hedging purposes is unknown, but it appears to be relatively small. Also, derivatives contracts account for only 3–6% of the median firms' total currency and interest rate exposure. Nonetheless, we know that many firms' derivatives activities

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Still, even these scaled-down figures represent huge amounts of money. For perspective, the budget for total expenditure of the United States government during 2012 was $ 3.5 trillion, and the total current value of the U.S. stock market is an estimated $ 23 trillion. Meanwhile, the global annual

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Derivative: A financial contract whose value is derived from the performance of assets, interest rates, currency exchange rates, or indexes. Derivative transactions include a wide assortment of financial contracts including structured debt obligations and deposits, swaps, futures, options, caps,

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opined: "At the end of the day, it probably does not make sense to harmonize everything because some of these products are quite different and certainly the market structures are quite different." On February 11, 2015, the Securities and Exchange Commission (SEC) released two final rules toward

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Nonetheless, the above and other challenges of the rule-making process have delayed full enactment of aspects of the legislation relating to derivatives. The challenges are further complicated by the necessity to orchestrate globalized financial reform among the nations that comprise the world's

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From another perspective, the farmer and the miller both reduce a risk and acquire a risk when they sign the futures contract: the farmer reduces the risk that the price of wheat will fall below the price specified in the contract and acquires the risk that the price of wheat will rise above the

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Lock products are theoretically valued at zero at the time of execution and thus do not typically require an up-front exchange between the parties. Based upon movements in the underlying asset over time, however, the value of the contract will fluctuate, and the derivative may be either an asset

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However, these are "notional" values, and some economists say that these aggregated values greatly exaggerate the market value and the true credit risk faced by the parties involved. For example, in 2010, while the aggregate of OTC derivatives exceeded $ 600 trillion, the value of the market was

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on the value of the underlying asset. Speculators look to buy an asset in the future at a low price according to a derivative contract when the future market price is high, or to sell an asset in the future at a high price according to a derivative contract when the future market price is less.

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in September 2009. In December 2012, they released a joint statement to the effect that they recognized that the market is a global one and "firmly support the adoption and enforcement of robust and consistent standards in and across jurisdictions", with the goals of mitigating risk, improving

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Under US law and the laws of most other developed countries, derivatives have special legal exemptions that make them a particularly attractive legal form to extend credit. The strong creditor protections afforded to derivatives counterparties, in combination with their complexity and lack of

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On December 20, 2013 the CFTC provided information on its swaps regulation "comparability" determinations. The release addressed the CFTC's cross-border compliance exceptions. Specifically it addressed which entity level and in some cases transaction-level requirements in six jurisdictions

2847:. Due to derivatives there is a considerable increase in trade volumes of the underlying spot market. The dominant factor behind such an escalation is increased participation by additional players who would not have otherwise participated due to absence of any procedure to transfer risk. 1761:– are almost always traded in this way. The OTC derivative market is the largest market for derivatives, and is largely unregulated with respect to disclosure of information between the parties, since the OTC market is made up of banks and other highly sophisticated parties, such as 3029:

to earn large returns from small movements in the underlying asset's price. However, investors could lose large amounts if the price of the underlying moves against them significantly. There have been several instances of massive losses in derivative markets, such as the following:

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transparency however, can cause capital markets to underprice credit risk. This can contribute to credit booms, and increase systemic risks. Indeed, the use of derivatives to conceal credit risk from third parties while protecting derivative counterparties contributed to the

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As supervision, reconnaissance of the activities of various participants becomes tremendously difficult in assorted markets; the establishment of an organized form of market becomes all the more imperative. Therefore, in the presence of an organized derivatives market,

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has the corresponding obligation to fulfill the transaction—that is to sell or buy—if the buyer (owner) "exercises" the option. The buyer pays a premium to the seller for this right. An option that conveys to the owner the right to buy something at a certain price is a

2384:, which is an agreement to buy or sell an asset on its spot date, which may vary depending on the instrument, for example most of the FX contracts have Spot Date two business days from today. The party agreeing to buy the underlying asset in the future assumes a 2228:

issues backed by consumer-backed products—car loans, consumer loans and credit cards, among others—are called ABS.) Originally developed for the corporate debt markets, over time CDOs evolved to encompass the mortgage and mortgage-backed security (MBS) markets.

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is looking into derivatives, too. The department's antitrust unit is actively investigating 'the possibility of anticompetitive practices in the credit derivatives clearing, trading and information services industries', according to a department spokeswoman."

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at the time the contract is entered into. The price of the underlying instrument, in whatever form, is paid before control of the instrument changes. This is one of the many forms of buy/sell orders where the time and date of trade is not the same as the

2656:". Both are commonly traded, but for clarity, the call option is more frequently discussed. Options valuation is a topic of ongoing research in academic and practical finance. In basic terms, the value of an option is commonly decomposed into two parts: 3151:

which regulates most derivatives, was quoted saying that the derivatives marketplace as it functions now "adds up to higher costs to all Americans". More oversight of the banks in this market is needed, he also said. Additionally, the report said, "he

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of the loan), and the seller of the CDS takes possession of the defaulted loan. However, anyone with sufficient collateral to trade with a bank or hedge fund can purchase a CDS, even buyers who do not hold the loan instrument and who have no direct

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Asset-backed securities, called ABS, are bonds or notes backed by financial assets. Typically these assets consist of receivables other than mortgage loans, such as credit card receivables, auto loans, manufactured-housing contracts and home-equity

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Like other private-label securities backed by assets, a CDO can be thought of as a promise to pay investors in a prescribed sequence, based on the cash flow the CDO collects from the pool of bonds or other assets it owns. The CDO is "sliced" into

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in the OTC derivatives market increased to $ 516 trillion at the end of June 2007, 135% higher than the level recorded in 2004. The total outstanding notional amount is US$ 708 trillion (as of June 2011). Of this total notional amount, 67% are

3100:. As such, there is the danger that their use could result in losses for which the investor would be unable to compensate. The possibility that this could lead to a chain reaction ensuing in an economic crisis was pointed out by famed investor 5833: 1385:

has reported that as of June 2011, the over-the-counter (OTC) derivatives market amounted to approximately $ 700 trillion, and the size of the market traded on exchanges totaled an additional $ 83 trillion. For the fourth quarter 2017 the

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In November 2012, the SEC and regulators from Australia, Brazil, the European Union, Hong Kong, Japan, Ontario, Quebec, Singapore, and Switzerland met to discuss reforming the OTC derivatives market, as had been agreed by leaders at the

2260:" or the "CDOs of CDOs". In the early 2000s, CDOs were generally diversified, but by 2006–2007—when the CDO market grew to hundreds of billions of dollars—this changed. CDO collateral became dominated not by loans, but by lower level ( 1266:

is attached to the financial derivative through contractual agreements and hence can be traded separately. The underlying asset does not have to be acquired. Derivatives therefore allow the breakup of ownership and participation in the

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Options contracts have been known for many centuries. However, both trading activity and academic interest increased when, as from 1973, options were issued with standardized terms and traded through a guaranteed clearing house at the

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entered into a swap agreement. Today, swaps are among the most heavily traded financial contracts in the world: the total amount of interest rates and currency swaps outstanding is more than $ 348 trillion in 2010, according to the

1789:, 9% are foreign exchange contracts, 2% are commodity contracts, 1% are equity contracts, and 12% are other. Because OTC derivatives are not traded on an exchange, there is no central counter-party. Therefore, they are subject to 3184:

many core definitions (such as the terms "swap", "security-based swap", "swap dealer", "security-based swap dealer", "major swap participant" and "major security-based swap participant") had still not been adopted. SEC Chairman

1933:, the owner can require the sale to take place at any time up to the maturity date. If the owner of the contract exercises this right, the counter-party has the obligation to carry out the transaction. Options are of two types: 1812:

or other exchanges. A derivatives exchange is a market where individuals trade standardized contracts that have been defined by the exchange. A derivatives exchange acts as an intermediary to all related transactions, and takes

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announced the creation of a secured credit facility of up to US$ 85 billion, to prevent the company's collapse by enabling AIG to meet its obligations to deliver additional collateral to its credit default swap trading

2934:. For futures/forwards the arbitrage free price is relatively straightforward, involving the price of the underlying together with the cost of carry (income received less interest costs), although there can be complexities. 2363:. Some claim that derivatives such as CDS are potentially dangerous in that they combine priority in bankruptcy with a lack of transparency. A CDS can be unsecured (without collateral) and be at higher risk for a default. 2694:

options are written as bilateral, customized contracts between a single buyer and seller, one or both of which may be a dealer or market-maker. Options are part of a larger class of financial instruments known as

2511:(i.e., the original value agreed upon, since any gain or loss has already been previously settled by marking to market). Upon marketing the strike price is often reached and creates much income for the "caller". 2379:

is a non-standardized contract between two parties to buy or to sell an asset at a specified future time at an amount agreed upon today, making it a type of derivative instrument. This is in contrast to a

1903:: contracts to buy or sell an asset on a future date at a price specified today. A futures contract differs from a forward contract in that the futures contract is a standardized contract written by a 1413:

referred to in his famous 2002 speech in which he warned against "financial weapons of mass destruction". CDS notional value in early 2012 amounted to $ 25.5 trillion, down from $ 55 trillion in 2008.

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Derivatives are contracts between two parties that specify conditions (especially the dates, resulting values and definitions of the underlying variables, the parties' contractual obligations, and the

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can close out its contract obligations by taking the opposite position on another futures contract on the same asset and settlement date. The difference in futures prices is then a profit or loss.

1697:, made poor and unauthorized investments in futures contracts. Through a combination of poor judgment, lack of oversight by the bank's management and regulators, and unfortunate events like the 1272:

can be effectively weaker, stronger (leverage effect), or implemented as inverse. Hence, specifically the market price risk of the underlying asset can be controlled in almost every situation.

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establishing a reporting and public disclosure framework for security-based swap transaction data. The two rules are not completely harmonized with the requirements with CFTC requirements.

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pricing inputs). Therefore, it is common that OTC derivatives are priced by Independent Agents that both counterparties involved in the deal designate upfront (when signing the contract).

1776:, which represent the cost of replacing all open contracts at the prevailing market prices, ... increased by 74% since 2004, to $ 11 trillion at the end of June 2007 (BIS 2007:24)." 2858:

Third parties can use publicly available derivative prices as educated predictions of uncertain future outcomes, for example, the likelihood that a corporation will default on its debts.

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for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved. For example, in the case of a swap involving two

1251:, e.g., bonds and stock, can also be considered derivatives, more precisely options, with the underlying being the firm's assets, but this is unusual outside of technical contexts. 1745:(OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary. Products such as 4356: 1870:

are two special types of exchange traded funds (ETFs) that are available to common traders and investors on major exchanges like the NYSE and Nasdaq. To maintain these products'

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and make a profit if the value of the underlying asset moves the way they expect (e.g. moves in a given direction, stays in or out of a specified range, reaches a certain level)

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payments (and interest rates) vary by tranche with the safest/most senior tranches paying the lowest and the lowest tranches paying the highest rates to compensate for higher

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not only replicate the discernment of the market participants about the future but also lead the prices of underlying to the professed future level. On the expiration of the

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Derivatives are more common in the modern era, but their origins trace back several centuries. One of the oldest derivatives is rice futures, which have been traded on the

3322: 3706: 2299:. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, receives a payoff if the loan defaults. It was invented by 3168:

comes into effect. The law mandated the clearing of certain swaps at registered exchanges and imposed various restrictions on derivatives. To implement Dodd-Frank, the

1101:, who made a profit in the exchange. However, Aristotle did not define this arrangement as a derivative but as a monopoly (Aristotle's Politics, Book I, Chapter XI). 854: 5452: 5531: 5478: 3335:

that is used to calculate payments made on swaps and other risk management products. This amount generally does not change hands and is thus referred to as notional.

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The arbitrage-free price for a derivatives contract can be complex, and there are many different variables to consider. Arbitrage-free pricing is a central topic of

4518: 2491:, which acts as an intermediary between buyer and seller. The party agreeing to buy the underlying asset in the future, the "buyer" of the contract, is said to be " 2344: 3172:. The Commission determines which swaps are subject to mandatory clearing and whether a derivatives exchange is eligible to clear a certain type of swap contract. 2916:

manually, making it difficult to automatically broadcast prices. In particular with OTC contracts, there is no central exchange to collate and disseminate prices.

2245:. As an example, a CDO might issue the following tranches in order of safeness: Senior AAA (sometimes known as "super senior"); Junior AAA; AA; A; BBB; Residual. 2833:, the prices of derivatives congregate with the prices of the underlying. Therefore, derivatives are essential tools to determine both current and future prices. 3052: 2734:

against another stream. These streams are called the swap's "legs". The swap agreement defines the dates when the cash flows are to be paid and the way they are

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and calculated. Usually at the time when the contract is initiated, at least one of these series of cash flows is determined by an uncertain variable such as a

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In March 2010, the Trade Information Warehouse announced it would give regulators greater access to its credit default swaps database. CDS data can be used by

883: 5396: 1953:: apart from the commonly used short-dated options which have a maximum maturity period of one year, there exist certain long-dated options as well, known as 6306: 5881: 1681:

Derivatives can be used to acquire risk, rather than to hedge against risk. Thus, some individuals and institutions will enter into a derivative contract to

5847: 1963:: contracts to exchange cash (flows) on or before a specified future date based on the underlying value of currencies exchange rates, bonds/interest rates, 5068: 3321:

High-risk mortgage securities: Securities where the price or expected average life is highly sensitive to interest rate changes, as determined by the U.S.

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that operates an exchange where the contract can be bought and sold; the forward contract is a non-standardized contract written by the parties themselves.

1409:(CDS), for which the inherent risk is considered high , the higher, nominal value remains relevant. It was this type of derivative that investment magnate 844: 809: 5431:"Joint Press Statement of Leaders on Operating Principles and Areas of Exploration in the Regulation of the Cross-Border OTC Derivatives Market; 2012-251" 4645: 3463: 3379: 2220:. An "asset-backed security" is used as an umbrella term for a type of security backed by a pool of assets—including collateralized debt obligations and 3253: 2663:

The second part is the "time value", which depends on a set of other factors which, through a multivariable, non-linear interrelationship, reflect the

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The first part is the "intrinsic value", defined as the difference between the market value of the underlying and the strike price of the given option.

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since the eighteenth century. Derivatives are broadly categorized by the relationship between the underlying asset and the derivative (such as

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Sergey Chernenko; Michael Faulkender (December 2011). "The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps".

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in the loan (these are called "naked" CDSs). If there are more CDS contracts outstanding than bonds in existence, a protocol exists to hold a

1845:). According to BIS, the combined turnover in the world's derivatives exchanges totaled US$ 344 trillion during Q4 2005. By December 2007 the 5762: 5743: 5724: 5705: 5213: 3994: 3952: 3895: 3744: 3610: 1531: 1140: 2953:

can be replicated by a continuous buying and selling strategy using only the stock. A simplified version of this valuation technique is the

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ability where the value of the derivative is linked to a specific condition or event (e.g., the underlying reaching a specific price level)

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Koehler, Christian (May 31, 2011). "The Relationship between the Complexity of Financial Derivatives and Systemic Risk". pp. 10–11.

6468: 4764: 3295: 3153: 2566: 2487:, making it a derivative product (i.e. a financial product that is derived from an underlying asset). The contracts are negotiated at a 1805: 1284: 635: 4360: 2256:—issue the CDOs and pay interest to investors. As CDOs developed, some sponsors repackaged tranches into yet another iteration called " 1925:, and is specified at the time the parties enter into the option. The option contract also specifies a maturity date. In the case of a 1398:

estimated to be much lower, at $ 21 trillion. The credit-risk equivalent of the derivative contracts was estimated at $ 3.3 trillion.

4203: 3582: 2794: 2582: 1846: 1769: 794: 3629:

Koehler, Christian (May 31, 2011). "The Relationship between the Complexity of Financial Derivatives and Systemic Risk". p. 10.

2355:), as well as loan-only credit default swaps (LCDS). In addition to corporations and governments, the reference entity can include a 1717:

opportunities, as when the current buying price of an asset falls below the price specified in a futures contract to sell the asset.

6204: 5366: 3541: 1897:: tailored contract between two parties, where payment takes place at a specific time in the future at today's pre-determined price. 1557: 1206: 4998: 4277: 2874: 2862:

In a nutshell, there is a substantial increase in savings and investment in the long run due to augmented activities by derivative

1817:

from both sides of the trade to act as a guarantee. The world's largest derivatives exchanges (by number of transactions) are the

6706: 5874: 4566: 1247:, but they can also be other derivatives, which adds another layer of complexity to proper valuation. The components of a firm's 1187: 516: 4033: 3732: 2569:, depending on whether it is an Agency MBS or a Non-Agency MBS; in the United States they may be issued by structures set up by 1734:

In broad terms, there are two groups of derivative contracts, which are distinguished by the way they are traded in the market:

1612:

Derivatives allow risk related to the price of the underlying asset to be transferred from one party to another. For example, a

5815: 4963: 4807: 3362:. Tier 1 capital consists of common shareholders equity, perpetual preferred shareholders equity with noncumulative dividends, 2570: 1159: 3133: 2970: 2321: 1765:. Reporting of OTC amounts is difficult because trades can occur in private, without activity being visible on any exchanges 1067: 6788: 6641: 6286: 4021: 2683: 2586: 2479:

between two parties to buy or sell a specified asset of standardized quantity and quality for a price agreed upon today (the

2210: 2205: 1535: 1144: 1043: 276: 186: 5658:

Söhnke M. Bartram; Gregory W. Brown; Frank R. Fehle (Spring 2009). "International Evidence on Financial Derivatives Usage".

1453:(or gearing), such that a small movement in the underlying value can cause a large difference in the value of the derivative 5755:

Structured Derivatives: New Tools for Investment Management: A Handbook of Structuring, Pricing & Investor Applications

5261:"The dependence structure in credit risk between money and derivatives markets: A time-varying conditional copula approach" 2291:

agreement that the seller of the CDS will compensate the buyer (the creditor of the reference loan) in the event of a loan

6793: 5535: 5482: 5326:

Financial Stability Board (2012). "OTC Derivatives Market Reforms Third Progress Report on Implementation" June 15, 2012

3341:(OTC) derivative contracts: Privately negotiated derivative contracts that are transacted off organized futures exchanges. 3090:

UBS AG, Switzerland's biggest bank, suffered a $ 2 billion loss through unauthorized trading discovered in September 2011.

2937:

However, for options and more complex derivatives, pricing involves developing a complex pricing model: understanding the

1166: 959: 928: 172: 4400:

Koehler, Christian (May 31, 2011). "The Relationship between the Complexity of Financial Derivatives and Systemic Risk".

4912: 4549: 3070: 3036: 2033: 2022: 1863: 1842: 1579:") at different points throughout its life. Importantly, either party is therefore exposed to the credit quality of its 3056: 6681: 6219: 6073: 5867: 4252: 3769: 3760: 3471: 3418: 3205: 3197: 2994: 2687: 2091: 1834: 1315: 1055: 35: 6300: 5343: 5181: 3484:

obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations thereof.

1929:, the owner has the right to require the sale to take place on (but not before) the maturity date; in the case of an 1520: 1173: 6478: 3338: 2691: 2456: 2452: 1878:

methods than what's usually required for maintenance of traditional ETFs. These instruments must also be regularly

1742: 1327: 1276: 1102: 1051: 738: 452: 142: 4803: 3192: 2946: 1539: 1524: 1133: 6582: 6393: 4456:"Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States" 3707:"ESMA data analysis values EU derivatives market at €660 trillion with central clearing increasing significantly" 3177: 3140: 2978: 2750: 2561:", or packages, the loans together into a security that can be sold to investors. The mortgages of an MBS may be 2332: 1591: 799: 684: 462: 236: 5260: 6701: 6696: 4656: 3433: 3284:

from a protection buyer to a credit protection seller. Credit derivative products can take many forms, such as

2597: 2592:

The shares of subprime MBSs issued by various structures, such as CMOs, are not identical but rather issued as

2535: 2265: 2221: 1904: 1782: 1630: 1319: 1155: 952: 488: 6351: 6296: 2675: 2674:

Although options valuation has been studied since the 19th century, the contemporary approach is based on the

5504: 5316:

https://www.theatlantic.com/business/archive/2011/06/will-the-cure-for-systemic-risk-kill-the-economy/240600/

2765:, the notional amount is usually not exchanged between counterparties. Consequently, swaps can be in cash or 6651: 6321: 6311: 6179: 6020: 5952: 5046: 2730:) payments associated with such bonds. Specifically, two counterparties agree to the exchange one stream of 2356: 2171: 131: 121: 4512:"Chart; ISDA Market Survey; Notional amounts outstanding at year-end, all surveyed contracts, 1987–present" 3351:, whose cash flow characteristics depend on one or more indices and / or have embedded forwards or options. 2440:, or to allow a party to take advantage of a quality of the underlying instrument which is time-sensitive. 6798: 6600: 6448: 6433: 6398: 6341: 5809: 5620: 5430: 4096: 3044: 3016: 2954: 2925: 2739: 2249: 2086: 1838: 1750: 1665: 1656: 1640:

Hedging also occurs when an individual or institution buys an asset (such as a commodity, a bond that has

1495:

purpose, allowing a riskless profit by simultaneously entering into transactions into two or more markets.

1432:

whose value moves in the opposite direction to their underlying position and cancels part or all of it out

1106: 290: 201: 2686:. Today, many options are created in a standardized form and traded through clearing houses on regulated 6661: 6512: 6428: 6005: 4883: 4864: 4522: 4215: 4016:

Hull, John C. (2014). "Options, Futures, and Other Derivatives (9th Edition)", Pearson, pp. 16–17.

3413: 3210: 3077: 2931: 2743: 2546: 2495:", and the party agreeing to sell the asset in the future, the "seller" of the contract, is said to be " 2360: 2343:. U.S. courts may soon be following suit. Most CDSs are documented using standard forms drafted by the 2217: 2190: 2133: 1875: 1773: 1471: 630: 241: 6326: 4741: 3649: 1353:) provide the buyer the right, but not the obligation to enter the contract under the terms specified. 4683:"Testimony Concerning Credit Default Swaps Before the House Committee on Agriculture October 15, 2008" 4493: 2600:

of 2006–2008 . The total face value of an MBS decreases over time, because like mortgages, and unlike

6615: 6572: 6562: 6552: 6273: 6214: 6149: 6103: 6098: 5972: 5932: 3438: 3428: 2942: 2766: 2719: 2640: 2632: 2340: 2304: 2128: 2048: 2027: 1964: 1867: 1858: 1809: 1295: 1288: 826: 743: 447: 372: 258: 101: 6331: 4101: 2393: 6620: 6408: 6154: 5625: 5327: 3654: 3285: 3222: 3040: 2830: 2696: 2429: 2317: 2277: 2119: 1786: 1406: 1350: 1047: 903: 893: 613: 570: 522: 467: 281: 5298: 2557:. The mortgages are sold to a group of individuals (a government agency or investment bank) that " 2347:(ISDA), although there are many variants. In addition to the basic, single-name swaps, there are 2324:, the lack of transparency in this large market became a concern to regulators as it could pose a 6671: 6656: 6625: 6610: 6577: 6443: 6234: 6199: 5962: 5927: 5890: 5773: 5638: 5584: 5112: 4955: 4937: 4929: 4616: 4114: 3443: 3423: 3105: 3022: 3010: 2938: 2863: 2798: 2774: 2523: 2406: 2352: 2313: 2214: 2177: 2081: 1975: 1777: 1450: 1443: 1391: 916: 898: 748: 703: 652: 493: 382: 116: 5139: 4592:

Kiff, John; Jennifer Elliott; Elias Kazarian; Jodi Scarlata; Carolyne Spackman (November 2009).

4166: 1829:(which lists a wide range of European products such as interest rate & index products), and 1180: 63: 4132: 3986: 3980: 3817: 2432:, or loss, by the purchasing party. Forwards, like other derivative securities, can be used to 1363:

Along with many other financial products and services, derivatives reform is an element of the

1073:

Derivatives are one of the three main categories of financial instruments, the other two being

6803: 6676: 6666: 6605: 6592: 6567: 6453: 6239: 6035: 5792: 5788: 5758: 5739: 5720: 5701: 5675: 5650: 5646: 5605: 5596: 5592: 5280: 5209: 5120: 4715: 4409: 4405: 4334: 4304: 4145: 4017: 3990: 3948: 3891: 3740: 3634: 3630: 3606: 3578: 3537: 3516: 3512: 3408: 3403: 3393: 3371: 3367: 3363: 3277: 3265: 3063: 3039:(AIG) lost more than US$ 18 billion through a subsidiary over the preceding three quarters on 2900:-free price, meaning that no risk-free profits can be made by trading in these contracts (see 2826: 2292: 2123: 2057: 1954: 1950: 1758: 1595: 1590:

Option products have immediate value at the outset because they provide specified protection (

1485: 1333:

Derivatives may broadly be categorized as "lock" or "option" products. Lock products (such as

1323: 1311: 1248: 804: 680: 575: 442: 437: 432: 406: 367: 191: 91: 5679: 5124: 5002: 4779: 4719: 4281: 4149: 1442:

Obtain exposure to the underlying where it is not possible to trade in the underlying (e.g.,

6557: 6547: 6537: 6496: 6491: 6473: 6403: 6169: 6164: 6136: 6088: 5967: 5907: 5667: 5630: 5576: 5561: 5272: 5162: 5102: 4921: 4843: 4608: 4106: 3944: 3887: 3531: 3307: 3303: 3299: 3169: 2950: 2902: 2762: 2758: 2754: 2652:"; an option that conveys the right of the owner to sell something at a certain price is a " 2623: 2519: 2515: 2504: 2488: 2448: 2444: 2348: 2156: 1913:: contracts that give the owner the right, but not the obligation, to buy (in the case of a 1910: 1900: 1894: 1621: 1584: 1576: 1463: 1436: 1346: 1342: 1338: 1303: 1299: 1263: 1074: 1035: 1031: 1027: 876: 669: 643: 561: 554: 537: 483: 457: 344: 326: 311: 231: 222: 126: 111: 73: 47: 4910:

Black, Fischer; Scholes, Myron (1973). "The Pricing of Options and Corporate Liabilities".

1668:(FRA), which is a contract to pay a fixed rate of interest six months after purchases on a 1254:

From the economic point of view, financial derivatives are cash flows that are conditioned

6767: 6737: 6732: 6686: 6522: 6517: 6463: 6373: 6281: 6254: 6194: 6189: 6159: 6108: 6093: 6010: 5990: 5837: 5047:"Launch of the WIDER study on The World Distribution of Household Wealth: 5 December 2006" 4896: 4682: 4593: 4553: 4455: 4211: 3598: 3398: 3375: 3348: 3344: 3328: 2974: 2941:

of the price of the underlying asset is often crucial. A key equation for the theoretical

2770: 2496: 2433: 2425: 2253: 2161: 2143: 1930: 1926: 1871: 1698: 1669: 1633:, insures a futures contract, not all derivatives are insured against counter-party risk. 1607: 1425: 1357: 1220: 1016: 859: 784: 775: 733: 698: 690: 498: 387: 301: 82: 5374: 5314:

Zubrod, Luke (2011). The Atlantic. "Will the 'Cure' for Systemic Risk Kill the Economy?"

5161:

Andrews, Edmund L.; de la Merced, Michael J.; Walsh, Mary Williams (September 16, 2008).

2878:

Total world derivatives from 1998 to 2007 compared to total world wealth in the year 2000

2307:

in 1994. In the event of default the buyer of the CDS receives compensation (usually the

995:

its value from the performance of an underlying entity. This underlying entity can be an

2797:(BIS). The five generic types of swaps, in order of their quantitative importance, are: 6742: 6727: 6527: 6438: 6388: 6365: 6346: 6174: 6116: 6083: 6078: 6058: 5982: 5086: 3359: 3355: 3239: 3101: 2990: 2806: 2723: 2667: 2601: 2558: 2492: 2389: 2300: 2288: 2261: 2225: 2182: 1960: 1849:

reported that "derivatives traded on exchanges surged 27% to a record $ 681 trillion."

1818: 1814: 1746: 1410: 1334: 1307: 1280: 1240: 1236: 1082: 1039: 766: 604: 296: 266: 181: 148: 5799:

Nassim N. Taleb (1996). “Dynamic Hedging: Managing Vanilla and Exotic Options”. Wiley.

4570: 3238:

Mandatory reporting regulations are being finalized in a number of countries, such as

6782: 6722: 6691: 6532: 6458: 6418: 6413: 6249: 6121: 6068: 6063: 6045: 5942: 5922: 5841: 5671: 5634: 5425: 5107: 5090: 4959: 4941: 4703: 4620: 3880:

Hedge Fund Alpha: A Framework for Generating and Understanding Investment Performance

3495: 3185: 3109: 2837: 2802: 2727: 2631:(the owner) the right, but not the obligation, to buy or sell an underlying asset or 2554: 2413: 2397: 2385: 2381: 2339:

of any entity on which a CDS is available, which can be compared to that provided by

2325: 2238: 2151: 2061: 1979: 1944: 1754: 1641: 1467: 1381: 1063: 1004: 833: 789: 565: 527: 507: 392: 353: 106: 5642: 5116: 4118: 6542: 6316: 6244: 6224: 6184: 6053: 6025: 6015: 5957: 5588: 5305:, December 11, 2010 (December 12, 2010, p. A1 NY ed.). Retrieved December 12, 2010. 4144:

Guay, Wayne R.; Kothari, S.P. (2001). "How Much do Firms Hedge with Derivatives?".

3499: 3271: 3214: 3144: 3084: 2891: 2712: 2636: 2296: 2242: 2053: 1922: 1694: 1580: 1572: 1367:

of 2010. The Act delegated many rule-making details of regulatory oversight to the

1268: 940: 758: 728: 588: 286: 163: 136: 17: 5821: 2969:

Derivatives are often subject to the following criticisms; particularly since the

1371:(CFTC) and those details are not finalized nor fully implemented as of late 2012. 5203: 4071: 3976: 3932: 3875: 1689:

Speculative trading in derivatives gained a great deal of notoriety in 1995 when

6423: 6291: 6262: 6258: 6209: 6000: 5995: 5397:"First take: Ten key points from the SEC's swaps reporting and disclosure rules" 4984: 3370:

in the equity accounts of consolidated subsidiaries. Tier 2 capital consists of

3332: 3281: 3120: 2852: 2844: 2810: 2778: 2649: 2578: 2437: 2336: 2257: 2103: 2041: 1934: 1914: 1879: 1790: 1690: 1682: 1652: 1625:

events unspecified by the contract, such as the weather, or that one party will

1509: 1477: 1456: 1259: 1122: 1020: 348: 213: 158: 153: 96: 5140:""Buffett's Time Bomb Goes Off on Wall Street" by James B. Kelleher of Reuters" 1345:) obligate the contractual parties to the terms over the life of the contract. 1070:, there has been increased pressure to move derivatives to trade on exchanges. 6747: 6383: 6378: 6144: 6030: 5580: 4706:; David A. Skeel, Jr. (2007). "The Promise And Perils of Credit Derivatives". 4612: 4439: 4186: 4110: 3274:: The legal and financial term for the other party in a financial transaction. 3076:

The loss of US$ 1.3 billion equivalent in oil derivatives in 1993 and 1994 by

2789: 2664: 2653: 2574: 2508: 2417: 2402: 2308: 2099: 1938: 1918: 1762: 1702: 1626: 1255: 1244: 1000: 583: 422: 358: 31: 30:

This article is about the term as used in finance. For the calculus term, see

5284: 5182:"Derivatives Can Be Hazardous To Your Health: The Case of Metallgesellschaft" 5024: 4818: 4546: 4167:"The Role of Derivatives in Corporate Finances: Are Firms Betting the Ranch?" 3860: 2949:, which is based on the assumption that the cash flows from a European stock 2843:

The intrinsic nature of derivatives market associates them to the underlying

27:

Financial contract whose value comes from the underlying entity's performance

5937: 5276: 4237:: According to figures published in F&O Week October 10, 2005. See also 3940: 3883: 3218: 2897: 2731: 2421: 1830: 1714: 1492: 1228: 1090: 1086: 1059: 888: 849: 532: 321: 316: 3677:"Clear and Present Danger; Centrally cleared derivatives.(clearing houses)" 6762: 4734:"Media Statement: DTCC Policy for Releasing CDS Data to Global Regulators" 3792:"Swapping bad ideas: A big battle is unfolding over an even bigger market" 923: 6507: 6229: 6126: 5947: 5560:

Söhnke M. Bartram; Brown, Gregory W.; Conrad, Jennifer C. (August 2011).

4221: 4207: 3843: 3676: 3026: 2894:, i.e. the price at which traders are willing to buy or sell the contract 2821:

Some of the salient economic functions of the derivative market include:

2585:(CMOs, often structured as real estate mortgage investment conduits) and 2550: 2476: 2095: 1947:: contracts that provide the owner with an all-or-nothing profit profile. 1794: 1429: 1012: 988: 336: 196: 3083:

The loss of US$ 1.2 billion equivalent in equity derivatives in 1995 by

3066:, which was long natural gas in September 2006 when the price plummeted. 3021:

The use of derivatives can result in large losses because of the use of

1808:(ETD) are those derivatives instruments that are traded via specialized 1647: 1147: in this section. Unsourced material may be challenged and removed. 4933: 2735: 2618: 2593: 2468: 2234: 980: 55: 3650:"Sensitive politics over Japan's staple crop delays rice futures plan" 3378:, cumulative and long-term preferred stock, and a portion of a bank's 2483:) with delivery and payment occurring at a specified future date, the 5859: 1617: 1428:

or to mitigate risk in the underlying, by entering into a derivative

1224: 1098: 208: 2977:

has developed attempting to address the below and other risks - see

1921:) an asset. The price at which the sale takes place is known as the 1890:

Some of the common variants of derivative contracts are as follows:

5848:"European Union proposals on derivatives regulation – 2008 onwards" 5700:(2nd ed.). Washington, D.C.: Institute for Financial Markets. 4925: 4644:

Christian Weistroffer; Deutsche Bank Research (December 21, 2009).

4444:

All the Devils Are Here, the Hidden History of the Financial Crisis

2836:

The derivatives market reallocates risk from the people who prefer

2388:, and the party agreeing to sell the asset in the future assumes a 1726:

have at least some speculative component for a variety of reasons.

1275:

There are two groups of derivative contracts: the privately traded

5778: 3247: 2715: 2553:, or more commonly a collection ("pool") of sometimes hundreds of 1826: 1822: 1646: 1613: 1481: 1394:

at a size of €660 trillion with 74 million outstanding contracts.

1232: 1094: 1023:, or getting access to otherwise hard-to-trade assets or markets. 996: 427: 377: 5424:

This article incorporates text from this source, which is in the

4844:"How can mortgage-backed securities bring down the U.S. economy?" 4133:"The Changing Use of Derivatives: More Hedging, Less Speculation" 1772:, who first surveyed OTC derivatives in 1995, reported that the " 1089:). The oldest example of a derivative in history, attested to by 5328:

http://www.financialstabilityboard.org/publications/r_120615.pdf

2998: 2605: 1223:) under which payments are to be made between the parties. The 1078: 753: 720: 331: 271: 5863: 5772:

Andrei N. Soklakov (2013). "Elasticity Theory of Structuring".

4185:

Ryan Stever; Christian Upper; Goetz von Peter (December 2007).

2436:

risk (typically currency or exchange rate risk), as a means of

2424:. The difference between the spot and the forward price is the 4161: 4159: 2855:

can be controlled, resulting in a more meticulous environment.

2785: 1503: 1326:); the market in which they trade (such as exchange-traded or 1283:

that do not go through an exchange or other intermediary, and

1116: 1011:. Derivatives can be used for a number of purposes, including 664: 4062:(Wiley 2004) Notional sum means there is no actual principal. 2420:, which is the price at which the asset changes hands on the 1988:

Some common examples of these derivatives are the following:

1874:, these funds' administrators must employ more sophisticated 1480:

allows an investor to receive steady payments, e.g. based on

1356:

Derivatives can be used either for risk management (i.e. to "

5856:, PwC Financial Services Regulatory Practice (December 2013) 5479:"DTCC's Global Trade Repository for OTC Derivatives ("GTR")" 5402:. PwC Financial Services Regulatory Practice, February 2015. 4646:"Credit default swaps: Heading towards a more stable system" 3533:

Derivatives for Decision Makers: Strategic Management Issues

2335:, regulators, and the media to monitor how the market views 4569:. Isdacdsmarketplace.com. December 31, 2010. Archived from 3292:

floors, collars, forwards and various combinations thereof.

2781:

on changes in the expected direction of underlying prices.

2428:

or forward discount, generally considered in the form of a

2351:

default swaps (BDSs), index CDSs, funded CDSs (also called

1797:, since each counter-party relies on the other to perform. 3762:

The Budget and Economic Outlook: Fiscal Years 2013 to 2023

1664:

be much higher in six months. The corporation could buy a

1062:

contracts have developed into a separate industry. In the

5505:"U.S. DTCC says barriers hinder full derivatives picture" 5453:"Derivatives: A first take on cross-border comparability" 5230:"UBS Loss Shows Banks Fail to Learn From Kerviel, Leeson" 3217:, preventing regulatory gaps, reducing the potential for 3176:

major financial markets, a primary responsibility of the

3166:

Dodd–Frank Wall Street Reform and Consumer Protection Act

2726:, the benefits in question can be the periodic interest ( 1365:

Dodd–Frank Wall Street Reform and Consumer Protection Act

5532:"Derivatives trades will be tracked by Depository Trust" 5367:"Interview – Not all SEC, CFTC rules must be harmonized" 5344:"SEC and CFTC oversight of derivatives: a status report" 5299:"A Secretive Banking Elite Rules Trading in Derivatives" 4210:, for end of June 2008, showed US$ 683.7 trillion total 3119:

Some derivatives (especially swaps) expose investors to

4804:"Understanding Derivatives: Markets and Infrastructure" 4639: 4637: 4594:"Credit Derivatives: Systemic Risks and Policy Options" 3250:

also made recommendations in with regard to reporting.

3001:

framework, which seeks to address this to some extent.

2784:

Swaps were first introduced to the public in 1981 when

4222:

Prior Period Regular OTC Derivatives Market Statistics

1379:

To give an idea of the size of the derivative market,

5811:

Understanding Derivatives: Markets and Infrastructure

4458:, a.k.a. "The Financial Crisis Inquiry Report", p.127 4238: 3739:. Douglas W. Arne. New York: Routledge. p. 343. 3059:

in January 2008 through mis-use of futures contracts.

1470:

without disturbing the underlying assets, as part of

5205:

Derivatives: markets, valuation, and risk management

3737:

Finance in Asia: Institutions, Regulation and Policy

3164:

Over-the-counter dealing will be less common as the

6715: 6634: 6591: 6487: 6364: 6272: 6135: 6044: 5981: 5915: 5906: 5787:Andrei N. Soklakov (2013). "Deriving Derivatives". 5562:"The Effects of Derivatives on Firm Risk and Value" 5091:"Has Financial Development Made the World Riskier?" 2416:of such a contract is commonly contrasted with the 4335:"ABS, MBS and CDO compared: An empirical analysis" 4305:"ABS, MBS and CDO compared: An empirical analysis" 4089:The Journal of Financial and Quantitative Analysis 3325:policy statement on high-risk mortgage securities. 3323:Federal Financial Institutions Examination Council 1629:on the contract. Although a third party, called a 5473: 5471: 5469: 5467: 5465: 5415: 5413: 5411: 5409: 2926:List of finance topics § Derivatives pricing 1109:in the US, are a more recent historical example. 3648:Kaori Suzuki; David Turner (December 10, 2005). 4519:International Swaps and Derivatives Association 3937:Introduction to Derivatives and Risk Management 3110:(See Berkshire Hathaway Annual Report for 2002) 3069:The loss of US$ 4.6 billion in the failed fund 3062:The loss of US$ 6.4 billion in the failed fund 2345:International Swaps and Derivatives Association 1713:Individuals and institutions may also look for 1402:Gross Domestic Product is about $ 65 trillion. 5604:Söhnke M. Bartram; Kevin Aretz (Winter 2010). 5569:Journal of Financial and Quantitative Analysis 5259:Wu, Weiou; G. McMillan, David (July 8, 2014). 2604:, and most other fixed-income securities, the 1957:. These are generally traded over the counter. 1019:), increasing exposure to price movements for 5875: 4421: 4419: 4192:(Report). Bank for International Settlements. 4049:Chisolm, Derivatives Demystified (Wiley 2004) 3733:"Debt, Derivatives and Complex Interactions." 3288:, credit linked notes and total return swaps. 3170:CFTC developed new rules in at least 30 areas 1583:and is interested in protecting itself in an 1093:, is thought to be a contract transaction of 1054:(off-exchange) or on an exchange such as the 960: 8: 5337: 5335: 4833:, Chapters 4 and 5 (Thomson West, 2013 ed.). 3921:, §§2:47–2:54 (Thomson West, 2013–2014 ed.). 3139:In the context of a 2010 examination of the 2840:to the people who have an appetite for risk. 1701:, Leeson incurred a $ 1.3 billion loss that 1097:, entered into by ancient Greek philosopher 1042:, and variations of these such as synthetic 1026:Some of the more common derivatives include 5719:(8th ed.). Harlow: Pearson Education. 4999:"Currency Derivatives: A Beginner's Module" 4738:Depository Trust & Clearing Corporation 4494:"Credit event auctions: Why do they exist?" 3577:(6th ed.). New Jersey: Prentice Hall. 3314:collateral was held by the counter-parties. 3298:: Standardized derivative contracts (e.g., 2471:, a 'futures contract' (more colloquially, 1721:Proportion used for hedging and speculation 1538:. Unsourced material may be challenged and 845:International Financial Reporting Standards 810:Separation of investment and retail banking 5912: 5882: 5868: 5860: 4180: 4178: 4176: 4174: 3624: 3622: 3244:European Market Infrastructure Regulations 3127:Financial reform and government regulation 2817:Economic function of the derivative market 1287:(ETD) that are traded through specialized 967: 953: 838: 771: 609: 411: 78: 42: 5777: 5689:Soft Dollars and Other Trading Activities 5624: 5606:"Corporate Hedging and Shareholder Value" 5163:"Fed's $ 85 billion Loan Rescues Insurer" 5138:Kelleher, James B. (September 18, 2008). 5106: 4100: 3919:Soft Dollars and Other Trading Activities 3468:Office of the Comptroller of the Currency 1558:Learn how and when to remove this message 1310:); the type of underlying asset (such as 1207:Learn how and when to remove this message 5696:Institute for Financial Markets (2011). 4278:"Financial Markets: A Beginner's Module" 3575:Options, Futures and another Derivatives 3191: 2979:Financial risk management § Banking 2873: 1990: 1974:Swaps can basically be categorized into 1421:Derivatives are used for the following: 6707:Power reverse dual-currency note (PRDC) 6647:Constant proportion portfolio insurance 5738:(2nd ed.). New York: McGraw-Hill. 5342:Proskauer Rose LLP (February 6, 2012). 4968:(7th ed.), McGraw-Hill, Chapter 20 3845:Buffett warns on investment 'time bomb' 3824:. Economist Newspaper Ltd. May 25, 2011 3455: 3318:bank holds no counter-party collateral. 1868:leveraged exchange-traded funds (LETFs) 774: 651: 612: 506: 475: 414: 221: 171: 81: 54: 5717:Options, Futures and Other Derivatives 5067:Boumlouka, Makrem (October 30, 2009). 4892: 4881: 4653:Deutsche Bank Research: Current Issues 4214:outstanding of OTC derivatives with a 3568: 3566: 3564: 3562: 3560: 3530:Crawford, George; Sen, Bidyut (1996). 3306:) that are transacted on an organized 2392:. The price agreed upon is called the 4556:. Latest available a/o March 1, 2012. 4034:"There's a Derivative in Your Cereal" 3933:"Advanced Derivatives and Strategies" 3931:Don M. Chance; Robert Brooks (2010). 3354:Total risk-based capital: The sum of 2749:The cash flows are calculated over a 2678:, which was first published in 1973. 1864:Inverse exchange-traded funds (IETFs) 1476:Avoid paying taxes. For example, an 1405:At least for one type of derivative, 1258:and discounted to present value. The 7: 6642:Collateralized debt obligation (CDO) 5236:. September 15, 2011. Archived from 5208:. John Wiley and Sons. p. 506. 3296:Exchange-traded derivative contracts 3149:Commodity Futures Trading Commission 3143:, an industry self-regulatory body, 2920:Determining the arbitrage-free price 2746:, equity price, or commodity price. 1536:adding citations to reliable sources 1388:European Securities Market Authority 1369:Commodity Futures Trading Commission 1145:adding citations to reliable sources 5829:Investment-foundations: Derivatives 4708:University of Cincinnati Law Review 4480:The Financial Crisis Inquiry Report 4468:The Financial Crisis Inquiry Report 4357:"What are Asset-Backed Securities?" 3876:"Using Derivatives to Create Alpha" 3380:allowance for loan and lease losses 2583:collateralized mortgage obligations 1833:(made up of the 2007 merger of the 5854:" Derivatives Regulatory Roulette" 4979:Ross; Westerfield; Jordan (2010). 4547:"ISDA 2010 Mid-Year Market Survey" 4427:Regulation of Investment Companies 4253:"Are ETFs Considered Derivatives?" 4204:Bank for International Settlements 3025:, or borrowing. Derivatives allow 2993:, a former chief economist of the 2887:Two common measures of value are: 2795:Bank for International Settlements 1847:Bank for International Settlements 1770:Bank for International Settlements 884:Private equity and venture capital 795:Bank for International Settlements 25: 5530:Release, Press (August 5, 2010). 4981:Fundamentals of Corporate Finance 4765:"Credit Derivatives: An Overview" 4446:, Portfolio, Penguin, 2010, p.120 2670:of that difference at expiration. 1673:increase and stabilize earnings. 1007:, and is often simply called the 929:Business and Economics portal 6761: 5672:10.1111/j.1755-053x.2009.01033.x 5635:10.1111/j.1475-6803.2010.01278.x 5534:. Futuresmag.com. Archived from 5419: 5108:10.1111/j.1468-036X.2006.00330.x 4740:. March 23, 2010. Archived from 4492:Lisa Pollack (January 5, 2012). 3859:Sheridan, Barrett (April 2008). 3818:"World GDP: In search of growth" 2883:Market and arbitrage-free prices 2571:government-sponsored enterprises 2514:A closely related contract is a 2443:A closely related contract is a 2222:mortgage-backed securities (MBS) 1841:and the 2008 acquisition of the 1508: 1121: 934: 922: 517:Base erosion and profit shifting 62: 5816:Federal Reserve Bank of Chicago 4965:Principles of Corporate Finance 4808:Federal Reserve Bank of Chicago 4344:. Munich Personal RePEc Archive 4314:. Munich Personal RePEc Archive 3731:Liu, Qiao; Lejot, Paul (2013). 3221:opportunities, and fostering a 2587:collateralized debt obligations 1853:Inverse ETFs and leveraged ETFs 1705:the centuries-old institution. 1390:estimated the size of European 1132:needs additional citations for 1044:collateralized debt obligations 6469:Year-on-year inflation-indexed 3011:Leverage (finance) § Risk 2813:(there are many other types). 2684:Chicago Board Options Exchange 2627:is a contract which gives the 2206:collateralized debt obligation 2199:Collateralized debt obligation 1825:Index Futures & Options), 1330:); and their pay-off profile. 1050:. Most derivatives are traded 277:Collateralised debt obligation 187:Bull (stock market speculator) 1: 6479:Zero-coupon inflation-indexed 5613:Journal of Financial Research 5095:European Financial Management 5069:"Alternatives in OTC Pricing" 4819:Forward Contract on Wikinvest 4772:Economic Review (FRB Atlanta) 4390:, §5:15 (Thomson West, 2014). 4208:OTC derivatives market report 3096:Derivatives typically have a 2711:is a derivative in which two 2503:cash (performance bond), the 1077:(i.e., stocks or shares) and 623:Final consumption expenditure 4913:Journal of Political Economy 3280:: A contract that transfers 3071:Long-Term Capital Management 3037:American International Group 2911:Determining the market price 2076:Option on Eurodollar future 1917:) or sell (in the case of a 1843:New York Mercantile Exchange 1738:Over-the-counter derivatives 1594:) over a given time period ( 1484:rate, while avoiding paying 1322:, commodity derivatives, or 1316:foreign exchange derivatives 6682:Foreign exchange derivative 6074:Callable bull/bear contract 5850:(archived 19 February 2014) 5757:. London: Financial Times. 5433:. Sec.gov. December 4, 2012 4858:"Options pre-Black Scholes" 4552:September 13, 2011, at the 4429:(Matthew Bender, 2014 ed.). 4072:"How Leeson broke the bank" 3982:Dealing With Financial Risk 3770:Congressional Budget Office 3472:U.S. Department of Treasury 3419:Foreign exchange derivative 3206:2009 G-20 Pittsburgh summit 3198:2009 G-20 Pittsburgh summit 3180:whose progress is ongoing. 2995:International Monetary Fund 2218:asset-backed security (ABS) 2092:Interest rate cap and floor 1835:Chicago Mercantile Exchange 1806:Exchange-traded derivatives 1801:Exchange-traded derivatives 1651:Derivatives traders in the 1285:exchange-traded derivatives 1056:Chicago Mercantile Exchange 36:Derivative (disambiguation) 6820: 5822:"Derivatives simple guide" 5481:. Dtcc.com. Archived from 5180:Edwards, Franklin (1995). 4831:Mortgage-Backed Securities 4388:Mortgage-Backed Securities 4165:Knowledge@Wharton (2006). 4131:Knowledge@Wharton (2012). 3977:"Derivatives and leverage" 3878:. In John M. Longo (ed.). 3683:. Economist Newspaper Ltd. 3134:2007–2008 financial crisis 3043:(CDSs). The United States 3014: 3008: 2971:2007–2008 financial crisis 2923: 2718:cash flows of one party's 2530:Mortgage-backed securities 2449:differ in certain respects 2409:themselves are exchanged. 2322:2007–2008 financial crisis 2187:Iron ore forward contract 2148:Option on currency future 1886:Common derivative contract 1856: 1787:credit default swaps (CDS) 1605: 1575:") or a liability (i.e., " 1279:(OTC) derivatives such as 1068:2007–2008 financial crisis 855:Professional certification 453:Enterprise risk management 237:Offshore financial centres 29: 6756: 6583:Stock market index future 5897: 5836:October 27, 2020, at the 5581:10.1017/s0022109011000275 4613:10.5089/9781451874006.001 4111:10.1017/S0022109011000391 3985:. The Economist. p. 3874:Khullar, Sanjeev (2009). 3603:Rubinstein on Derivatives 3536:. John Wiley & Sons. 3178:Financial Stability Board 2751:notional principal amount 2639:on or before a specified 2295:(by the debtor) or other 2078:Option on Euribor future 1996: 1993: 1967:, stocks or other assets. 1882:and re-indexed each day. 1320:interest rate derivatives 1156:"Derivative" finance 1015:against price movements ( 800:Financial Stability Board 6702:Mortgage-backed security 6697:Interest rate derivative 6672:Equity-linked note (ELN) 6657:Credit-linked note (CLN) 5687:Lins Lemke (2013–2014). 4829:Lemke, Lins and Picard, 4386:Lemke, Lins and Picard, 4235:Futures and Options Week 3975:Shirreff, David (2004). 3434:Interest rate derivative 2598:subprime mortgage crisis 2537:mortgage-backed security 2396:, which is equal to the 2266:subprime mortgage crisis 2252:—rather than the parent 2250:special-purpose entities 2005:Exchange-traded options 2002:Exchange-traded futures 489:Mergers and acquisitions 6652:Contract for difference 5953:Risk-free interest rate 5734:Michael Durbin (2011). 5277:10.1108/MF-07-2013-0184 5202:Whaley, Robert (2006). 4567:"ISDA: CDS Marketplace" 4425:Lemke, Lins and Smith, 4359:. SIFMA. Archived from 4060:Derivatives Demystified 3685:(subscription required) 3496:"Derivative Definition" 3196:Country leaders at the 3053:loss of US$ 7.2 Billion 2825:Prices in a structured 2769:. Swaps can be used to 2699:or simply derivatives. 2361:asset-backed securities 2357:special-purpose vehicle 2333:financial professionals 1783:interest rate contracts 1751:forward rate agreements 1500:Mechanics and valuation 6434:Forward Rate Agreement 5753:Mehraj Mattoo (1997). 5027:. Bis.org. May 7, 2010 4891:Cite journal requires 4763:Mengle, David (2007). 4521:(ISDA). Archived from 4032:Peterson, Sam (2010), 3861:"600,000,000,000,000?" 3573:Hull, John C. (2006). 3347:: Non-mortgage-backed 3200: 3147:, the chairman of the 3136:in the United States. 3017:List of trading losses 2955:binomial options model 2879: 2773:certain risks such as 2740:floating interest rate 2341:credit rating agencies 2116:Option on Bond future 2087:Forward rate agreement 1839:Chicago Board of Trade 1666:forward rate agreement 1660: 1657:Chicago Board of Trade 1488:and keeping the stock. 291:certificate of deposit 34:. For other uses, see 6789:Derivatives (finance) 6662:Credit default option 6006:Employee stock option 5736:All About Derivatives 5715:John C. Hull (2011). 5189:Derivatives Quarterly 3414:Financial engineering 3213:, protecting against 3195: 3154:Department of Justice 3078:Metallgesellschaft AG 3009:Further information: 2947:Black–Scholes formula 2932:financial mathematics 2877: 2744:foreign exchange rate 2549:that is secured by a 2547:asset-backed security 2134:Credit default option 1876:financial engineering 1810:derivatives exchanges 1650: 1472:transition management 1289:derivatives exchanges 242:Conduit and sink OFCs 6794:Securities (finance) 6616:Inflation derivative 6601:Commodity derivative 6573:Single-stock futures 6563:Normal backwardation 6553:Interest rate future 6394:Conditional variance 5900:Derivative (finance) 5660:Financial Management 5365:Younglai, Rachelle. 5191:(Spring 1995): 8–17. 4785:on December 14, 2010 4218:of US$ 20 trillion. 4187:BIS Quarterly Review 3947:. pp. 483–515. 3848:, BBC, March 4, 2003 3439:Property derivatives 3429:Inflation derivative 3374:, intermediate-term 3286:credit default swaps 3098:large notional value 3045:Federal Reserve Bank 3041:credit default swaps 2973:, the discipline of 2943:valuation of options 2720:financial instrument 2475:) is a standardized 2318:credit event auction 2129:Repurchase agreement 2049:Repurchase agreement 2038:Single-share option 1965:commodities exchange 1859:Exchange-traded fund 1532:improve this section 1407:credit default swaps 1296:Dojima Rice Exchange 1291:or other exchanges. 1141:improve this article 1048:credit default swaps 468:Financial statements 448:Credit rating agency 373:Repurchase agreement 6768:Business portal 6621:Property derivative 5698:Futures and Options 5511:. February 12, 2013 5240:on October 30, 2012 4956:Brealey, Richard A. 4870:on October 10, 2015 4778:(4). Archived from 4662:on February 2, 2010 4573:on January 19, 2012 4438:Bethany McLean and 3655:The Financial Times 3223:level playing field 2831:derivative contract 2799:interest rate swaps 2697:derivative products 2676:Black–Scholes model 2353:credit-linked notes 2279:credit default swap 2272:Credit default swap 2120:Credit default swap 2028:Single-stock future 1793:, like an ordinary 1444:weather derivatives 1351:interest rate swaps 904:Accounting scandals 894:Stock market bubble 614:Government spending 571:Employment contract 523:Corporate tax haven 282:Credit default swap 18:Derivatives trading 6626:Weather derivative 6611:Freight derivative 6593:Exotic derivatives 6513:Commodities future 6200:Intermarket spread 5963:Synthetic position 5891:Derivatives market 5303:The New York Times 5265:Managerial Finance 5167:The New York Times 5089:(September 2006). 5073:Hedge Funds Review 5005:on August 30, 2011 4601:IMF Working Papers 4284:on August 30, 2011 4216:gross market value 4206:(BIS) semi-annual 3772:. February 5, 2013 3711:www.esma.europa.eu 3444:Weather derivative 3424:Freight derivative 3368:minority interests 3201: 3106:Berkshire Hathaway 2939:stochastic process 2880: 2864:market participant 2775:interest rate risk 2314:insurable interest 2178:Weather derivative 2174:crude oil futures 2082:Interest rate swap 2071:Eurodollar future 1976:Interest rate swap 1774:gross market value 1759:exotic derivatives 1661: 1466:between different 1392:derivatives market 1349:products (such as 1324:credit derivatives 1312:equity derivatives 899:Stock market crash 749:Investment banking 739:Fractional-reserve 704:Warrant of payment 653:Government revenue 576:Financial planning 494:Structured finance 6776: 6775: 6677:Equity derivative 6667:Credit derivative 6635:Other derivatives 6606:Energy derivative 6568:Perpetual futures 6449:Overnight indexed 6399:Constant maturity 6360: 6359: 6307:Finite difference 6240:Protective option 5764:978-0-273-61120-2 5745:978-0-07-174351-8 5726:978-0-13-260460-4 5707:978-0-615-35082-0 5485:on March 20, 2013 5215:978-0-471-78632-0 5087:Raghuram G. Rajan 4846:, How Stuff Works 4744:on April 29, 2010 3996:978-1-57660-162-4 3954:978-0-324-60120-6 3897:978-981-283-465-2 3746:978-0-415-42319-9 3612:978-1-899332-53-3 3409:Exotic derivative 3404:Equity derivative 3394:Credit derivative 3372:subordinated debt 3364:retained earnings 3331:: The nominal or 3300:futures contracts 3278:Credit derivative 3266:Bilateral netting 3121:counterparty risk 3115:Counterparty risk 3064:Amaranth Advisors 2827:derivative market 2688:options exchanges 2196: 2195: 2140:Foreign exchange 2124:Total return swap 1791:counterparty risk 1768:According to the 1568: 1567: 1560: 1486:capital gains tax 1464:asset allocations 1249:capital structure 1217: 1216: 1209: 1191: 977: 976: 867: 866: 817: 816: 805:Deposit insurance 711: 710: 545: 544: 443:Corporate finance 438:Capital structure 433:Capital budgeting 368:Performance bonds 249: 248: 232:Financial centres 192:Financial planner 92:Asset (economics) 16:(Redirected from 6811: 6766: 6765: 6538:Forwards pricing 6312:Garman–Kohlhagen 5913: 5884: 5877: 5870: 5861: 5796: 5783: 5781: 5768: 5749: 5730: 5711: 5692: 5683: 5654: 5628: 5610: 5600: 5566: 5548: 5547: 5545: 5543: 5538:on June 19, 2013 5527: 5521: 5520: 5518: 5516: 5501: 5495: 5494: 5492: 5490: 5475: 5460: 5459: 5458:. December 2013. 5457: 5449: 5443: 5442: 5440: 5438: 5423: 5422: 5417: 5404: 5403: 5401: 5393: 5387: 5386: 5384: 5382: 5377:on March 6, 2016 5373:. Archived from 5362: 5356: 5355: 5353: 5351: 5339: 5330: 5324: 5318: 5312: 5306: 5295: 5289: 5288: 5256: 5250: 5249: 5247: 5245: 5226: 5220: 5219: 5199: 5193: 5192: 5186: 5177: 5171: 5170: 5158: 5152: 5151: 5149: 5147: 5135: 5129: 5128: 5110: 5083: 5077: 5076: 5064: 5058: 5057: 5055: 5053: 5043: 5037: 5036: 5034: 5032: 5021: 5015: 5014: 5012: 5010: 5001:. Archived from 4995: 4989: 4988: 4983:(9th ed.). 4976: 4970: 4969: 4952: 4946: 4945: 4907: 4901: 4900: 4894: 4889: 4887: 4879: 4877: 4875: 4869: 4863:. Archived from 4862: 4856:Benhamou, Eric. 4853: 4847: 4840: 4834: 4827: 4821: 4816: 4810: 4801: 4795: 4794: 4792: 4790: 4784: 4769: 4760: 4754: 4753: 4751: 4749: 4730: 4724: 4723: 4700: 4694: 4693: 4691: 4689: 4678: 4672: 4671: 4669: 4667: 4661: 4655:. Archived from 4650: 4641: 4632: 4631: 4629: 4627: 4607:(WP/09/254): 1. 4598: 4589: 4583: 4582: 4580: 4578: 4563: 4557: 4544: 4538: 4537: 4535: 4533: 4528:on March 7, 2012 4527: 4516: 4508: 4502: 4501: 4489: 4483: 4477: 4471: 4465: 4459: 4453: 4447: 4436: 4430: 4423: 4414: 4413: 4397: 4391: 4384: 4378: 4376: 4370: 4368: 4363:on June 29, 2018 4353: 4351: 4349: 4339: 4330: 4324: 4323: 4321: 4319: 4309: 4300: 4294: 4293: 4291: 4289: 4280:. Archived from 4274: 4268: 4267: 4265: 4263: 4248: 4242: 4232: 4226: 4212:notional amounts 4202:BIS survey: The 4200: 4194: 4193: 4191: 4182: 4169: 4163: 4154: 4153: 4141: 4135: 4129: 4123: 4122: 4104: 4095:(6): 1727–1754. 4084: 4078: 4069: 4063: 4056: 4050: 4047: 4041: 4030: 4024: 4014: 4008: 4007: 4005: 4003: 3972: 3966: 3965: 3963: 3961: 3945:Cengage Learning 3939:(8th ed.). 3928: 3922: 3917:Lemke and Lins, 3915: 3909: 3908: 3906: 3904: 3888:World Scientific 3871: 3865: 3864: 3856: 3850: 3849: 3840: 3834: 3833: 3831: 3829: 3814: 3808: 3807: 3805: 3803: 3798:. April 27, 2013 3788: 3782: 3781: 3779: 3777: 3767: 3757: 3751: 3750: 3728: 3722: 3721: 3719: 3717: 3703: 3697: 3696: 3694: 3692: 3687:. April 12, 2012 3686: 3673: 3667: 3666: 3664: 3662: 3645: 3639: 3638: 3626: 3617: 3616: 3595: 3589: 3588: 3570: 3555: 3554: 3552: 3550: 3527: 3521: 3520: 3508: 3502: 3493: 3487: 3486: 3480: 3478: 3460: 3345:Structured notes 3339:Over-the-counter 3308:futures exchange 3057:Société Générale 2985:Hidden tail risk 2903:rational pricing 2805:, credit swaps, 2753:. Contrary to a 2692:over-the-counter 2516:forward contract 2489:futures exchange 2453:over the counter 2445:futures contract 2373:forward contract 2157:Currency forward 1991: 1743:Over-the-counter 1622:futures contract 1585:event of default 1577:out of the money 1563: 1556: 1552: 1549: 1543: 1512: 1504: 1328:over-the-counter 1277:over-the-counter 1264:underlying asset 1262:inherent in the 1212: 1205: 1201: 1198: 1192: 1190: 1149: 1125: 1117: 1052:over-the-counter 969: 962: 955: 941:Money portal 939: 938: 937: 927: 926: 877:Economic history 839: 772: 670:Deficit spending 644:Transfer payment 610: 538:Transfer pricing 484:Leveraged buyout 458:Enterprise value 412: 327:Letter of credit 312:Futures contract 145: 143:Over-the-counter 132:Foreign exchange 79: 66: 43: 21: 6819: 6818: 6814: 6813: 6812: 6810: 6809: 6808: 6779: 6778: 6777: 6772: 6760: 6752: 6738:Great Recession 6733:Government debt 6711: 6687:Fund derivative 6630: 6587: 6548:Futures pricing 6523:Dividend future 6518:Currency future 6501: 6483: 6356: 6332:Put–call parity 6268: 6255:Vertical spread 6190:Diagonal spread 6160:Calendar spread 6131: 6040: 5977: 5902: 5893: 5888: 5838:Wayback Machine 5806: 5786: 5771: 5765: 5752: 5746: 5733: 5727: 5714: 5708: 5695: 5691:. Thomson West. 5686: 5657: 5608: 5603: 5564: 5559: 5556: 5554:Further reading 5551: 5541: 5539: 5529: 5528: 5524: 5514: 5512: 5503: 5502: 5498: 5488: 5486: 5477: 5476: 5463: 5455: 5451: 5450: 5446: 5436: 5434: 5429: 5420: 5418: 5407: 5399: 5395: 5394: 5390: 5380: 5378: 5364: 5363: 5359: 5349: 5347: 5341: 5340: 5333: 5325: 5321: 5313: 5309: 5297:Story, Louise, 5296: 5292: 5258: 5257: 5253: 5243: 5241: 5228: 5227: 5223: 5216: 5201: 5200: 5196: 5184: 5179: 5178: 5174: 5160: 5159: 5155: 5145: 5143: 5137: 5136: 5132: 5085: 5084: 5080: 5066: 5065: 5061: 5051: 5049: 5045: 5044: 5040: 5030: 5028: 5023: 5022: 5018: 5008: 5006: 4997: 4996: 4992: 4978: 4977: 4973: 4954: 4953: 4949: 4909: 4908: 4904: 4890: 4880: 4873: 4871: 4867: 4860: 4855: 4854: 4850: 4841: 4837: 4828: 4824: 4817: 4813: 4802: 4798: 4788: 4786: 4782: 4767: 4762: 4761: 4757: 4747: 4745: 4732: 4731: 4727: 4702: 4701: 4697: 4687: 4685: 4680: 4679: 4675: 4665: 4663: 4659: 4648: 4643: 4642: 4635: 4625: 4623: 4596: 4591: 4590: 4586: 4576: 4574: 4565: 4564: 4560: 4554:Wayback Machine 4545: 4541: 4531: 4529: 4525: 4514: 4510: 4509: 4505: 4491: 4490: 4486: 4478: 4474: 4466: 4462: 4454: 4450: 4437: 4433: 4424: 4417: 4399: 4398: 4394: 4385: 4381: 4366: 4364: 4355: 4347: 4345: 4337: 4332: 4331: 4327: 4317: 4315: 4307: 4302: 4301: 4297: 4287: 4285: 4276: 4275: 4271: 4261: 4259: 4251:Morris, Jason. 4250: 4249: 4245: 4233: 4229: 4201: 4197: 4189: 4184: 4183: 4172: 4164: 4157: 4143: 4142: 4138: 4130: 4126: 4102:10.1.1.422.7302 4086: 4085: 4081: 4070: 4066: 4057: 4053: 4048: 4044: 4031: 4027: 4015: 4011: 4001: 3999: 3997: 3974: 3973: 3969: 3959: 3957: 3955: 3930: 3929: 3925: 3916: 3912: 3902: 3900: 3898: 3890:. p. 105. 3873: 3872: 3868: 3863:. Newsweek Inc. 3858: 3857: 3853: 3842: 3841: 3837: 3827: 3825: 3816: 3815: 3811: 3801: 3799: 3790: 3789: 3785: 3775: 3773: 3765: 3759: 3758: 3754: 3747: 3730: 3729: 3725: 3715: 3713: 3705: 3704: 3700: 3690: 3688: 3684: 3675: 3674: 3670: 3660: 3658: 3647: 3646: 3642: 3628: 3627: 3620: 3613: 3599:Mark Rubinstein 3597: 3596: 3592: 3585: 3572: 3571: 3558: 3548: 3546: 3544: 3529: 3528: 3524: 3510: 3509: 3505: 3494: 3490: 3476: 3474: 3462: 3461: 3457: 3453: 3448: 3399:Derivatives law 3389: 3376:preferred stock 3349:debt securities 3329:Notional amount 3262: 3242:in the US, the 3236: 3129: 3117: 3019: 3013: 3007: 2987: 2975:Risk management 2967: 2928: 2922: 2913: 2885: 2872: 2819: 2807:commodity swaps 2705: 2635:at a specified 2615: 2532: 2465: 2426:forward premium 2369: 2274: 2254:investment bank 2213:) is a type of 2201: 2162:Currency option 2144:Currency future 2122: 2102: 2098: 2094: 2077: 2073:Euribor future 2072: 2060: 2056: 2047: 2037: 2026: 1997:CONTRACT TYPES 1931:American option 1927:European option 1888: 1872:net asset value 1861: 1855: 1803: 1740: 1732: 1723: 1711: 1699:Kobe earthquake 1679: 1670:notional amount 1642:coupon payments 1610: 1608:Hedge (finance) 1604: 1592:intrinsic value 1564: 1553: 1547: 1544: 1529: 1513: 1502: 1419: 1377: 1221:notional amount 1213: 1202: 1196: 1193: 1150: 1148: 1138: 1126: 1115: 973: 935: 933: 921: 909: 908: 879: 869: 868: 860:Fund governance 836: 819: 818: 785:Banking license 776:Bank regulation 763: 734:Deposit account 723: 713: 712: 699:Non-tax revenue 695: 674: 640: 607: 597: 596: 593: 557: 547: 546: 499:Venture capital 463:Risk management 409: 399: 398: 397: 388:Syndicated loan 364: 261: 251: 250: 141: 76: 39: 28: 23: 22: 15: 12: 11: 5: 6817: 6815: 6807: 6806: 6801: 6796: 6791: 6781: 6780: 6774: 6773: 6771: 6770: 6757: 6754: 6753: 6751: 6750: 6745: 6743:Municipal debt 6740: 6735: 6730: 6728:Corporate debt 6725: 6719: 6717: 6713: 6712: 6710: 6709: 6704: 6699: 6694: 6689: 6684: 6679: 6674: 6669: 6664: 6659: 6654: 6649: 6644: 6638: 6636: 6632: 6631: 6629: 6628: 6623: 6618: 6613: 6608: 6603: 6597: 6595: 6589: 6588: 6586: 6585: 6580: 6575: 6570: 6565: 6560: 6555: 6550: 6545: 6540: 6535: 6530: 6528:Forward market 6525: 6520: 6515: 6510: 6504: 6502: 6500: 6499: 6494: 6488: 6485: 6484: 6482: 6481: 6476: 6471: 6466: 6461: 6456: 6451: 6446: 6441: 6436: 6431: 6426: 6421: 6416: 6411: 6409:Credit default 6406: 6401: 6396: 6391: 6386: 6381: 6376: 6370: 6368: 6362: 6361: 6358: 6357: 6355: 6354: 6349: 6344: 6339: 6334: 6329: 6324: 6319: 6314: 6309: 6304: 6294: 6289: 6284: 6278: 6276: 6270: 6269: 6267: 6266: 6252: 6247: 6242: 6237: 6232: 6227: 6222: 6217: 6212: 6207: 6205:Iron butterfly 6202: 6197: 6192: 6187: 6182: 6177: 6175:Covered option 6172: 6167: 6162: 6157: 6152: 6147: 6141: 6139: 6133: 6132: 6130: 6129: 6124: 6119: 6114: 6113:Mountain range 6111: 6106: 6101: 6096: 6091: 6086: 6081: 6076: 6071: 6066: 6061: 6056: 6050: 6048: 6042: 6041: 6039: 6038: 6033: 6028: 6023: 6018: 6013: 6008: 6003: 5998: 5993: 5987: 5985: 5979: 5978: 5976: 5975: 5970: 5965: 5960: 5955: 5950: 5945: 5940: 5935: 5930: 5925: 5919: 5917: 5910: 5904: 5903: 5898: 5895: 5894: 5889: 5887: 5886: 5879: 5872: 5864: 5858: 5857: 5851: 5845: 5825: 5819: 5805: 5804:External links 5802: 5801: 5800: 5797: 5784: 5769: 5763: 5750: 5744: 5731: 5725: 5712: 5706: 5693: 5684: 5666:(1): 185–206. 5655: 5626:10.1.1.534.728 5619:(4): 317–371. 5601: 5575:(4): 967–999. 5555: 5552: 5550: 5549: 5522: 5496: 5461: 5444: 5405: 5388: 5357: 5331: 5319: 5307: 5290: 5271:(8): 758–769. 5251: 5221: 5214: 5194: 5172: 5153: 5130: 5101:(4): 499–533. 5078: 5059: 5038: 5016: 4990: 4987:. p. 746. 4971: 4960:Myers, Stewart 4947: 4926:10.1086/260062 4920:(3): 637–654. 4902: 4893:|journal= 4848: 4835: 4822: 4811: 4796: 4755: 4725: 4695: 4673: 4633: 4584: 4558: 4539: 4503: 4484: 4472: 4460: 4448: 4431: 4415: 4392: 4379: 4333:Vink, Dennis. 4325: 4303:Vink, Dennis. 4295: 4269: 4243: 4227: 4195: 4170: 4155: 4136: 4124: 4079: 4064: 4051: 4042: 4025: 4009: 3995: 3967: 3953: 3923: 3910: 3896: 3866: 3851: 3835: 3809: 3783: 3752: 3745: 3723: 3698: 3668: 3640: 3618: 3611: 3605:. Risk Books. 3590: 3584:978-0131499089 3583: 3556: 3542: 3522: 3503: 3488: 3454: 3452: 3449: 3447: 3446: 3441: 3436: 3431: 3426: 3421: 3416: 3411: 3406: 3401: 3396: 3390: 3388: 3385: 3384: 3383: 3360:tier 2 capital 3352: 3342: 3336: 3326: 3319: 3315: 3311: 3293: 3289: 3275: 3269: 3261: 3258: 3240:Dodd Frank Act 3235: 3232: 3128: 3125: 3116: 3113: 3102:Warren Buffett 3094: 3093: 3092: 3091: 3088: 3081: 3074: 3067: 3060: 3049: 3006: 3003: 2991:Raghuram Rajan 2986: 2983: 2966: 2963: 2921: 2918: 2912: 2909: 2908: 2907: 2895: 2884: 2881: 2871: 2868: 2860: 2859: 2856: 2848: 2841: 2834: 2818: 2815: 2803:currency swaps 2713:counterparties 2704: 2701: 2690:, while other 2672: 2671: 2668:expected value 2661: 2614: 2611: 2531: 2528: 2464: 2461: 2394:delivery price 2390:short position 2371:In finance, a 2368: 2365: 2301:Blythe Masters 2289:financial swap 2273: 2270: 2226:Securitization 2200: 2197: 2194: 2193: 2188: 2185: 2183:Commodity swap 2180: 2175: 2169: 2165: 2164: 2159: 2154: 2149: 2146: 2141: 2137: 2136: 2131: 2126: 2117: 2114: 2111: 2107: 2106: 2089: 2084: 2079: 2074: 2069: 2068:Interest rate 2065: 2064: 2051: 2044: 2039: 2030: 2020: 2016: 2015: 2012: 2009: 2006: 2003: 1999: 1998: 1995: 1986: 1985: 1984: 1983: 1969: 1968: 1958: 1948: 1945:Binary options 1942: 1908: 1905:clearing house 1898: 1887: 1884: 1857:Main article: 1854: 1851: 1819:Korea Exchange 1815:initial margin 1802: 1799: 1755:exotic options 1739: 1736: 1731: 1728: 1722: 1719: 1710: 1707: 1693:, a trader at 1678: 1675: 1631:clearing house 1606:Main article: 1603: 1600: 1566: 1565: 1516: 1514: 1507: 1501: 1498: 1497: 1496: 1489: 1474: 1460: 1454: 1447: 1440: 1433: 1418: 1415: 1411:Warren Buffett 1376: 1375:Size of market 1373: 1256:stochastically 1241:interest rates 1215: 1214: 1129: 1127: 1120: 1114: 1111: 975: 974: 972: 971: 964: 957: 949: 946: 945: 944: 943: 931: 919: 911: 910: 907: 906: 901: 896: 891: 886: 880: 875: 874: 871: 870: 865: 864: 863: 862: 857: 852: 847: 837: 825: 824: 821: 820: 815: 814: 813: 812: 807: 802: 797: 792: 787: 779: 778: 770: 769: 767:Lists of banks 762: 761: 756: 751: 746: 741: 736: 731: 725: 724: 719: 718: 715: 714: 709: 708: 707: 706: 701: 696: 694: 693: 688: 677: 675: 673: 672: 667: 661: 656: 655: 649: 648: 647: 646: 641: 639: 638: 636:Redistribution 633: 627: 625: 617: 616: 608: 603: 602: 599: 598: 595: 594: 592: 591: 586: 580: 578: 573: 568: 558: 553: 552: 549: 548: 543: 542: 541: 540: 535: 530: 525: 520: 511: 510: 504: 503: 502: 501: 496: 491: 486: 478: 477: 473: 472: 471: 470: 465: 460: 455: 450: 445: 440: 435: 430: 425: 417: 416: 410: 405: 404: 401: 400: 396: 395: 390: 385: 380: 375: 370: 363: 362: 356: 351: 341: 340: 339: 334: 329: 324: 319: 314: 309: 304: 299: 294: 284: 279: 274: 269: 263: 262: 257: 256: 253: 252: 247: 246: 245: 244: 239: 234: 226: 225: 219: 218: 217: 216: 211: 206: 205: 204: 194: 189: 184: 182:Angel investor 176: 175: 169: 168: 167: 166: 161: 156: 151: 149:Private equity 146: 139: 134: 129: 124: 119: 114: 109: 104: 99: 94: 86: 85: 77: 72: 71: 68: 67: 59: 58: 52: 51: 26: 24: 14: 13: 10: 9: 6: 4: 3: 2: 6816: 6805: 6802: 6800: 6799:Financial law 6797: 6795: 6792: 6790: 6787: 6786: 6784: 6769: 6764: 6759: 6758: 6755: 6749: 6746: 6744: 6741: 6739: 6736: 6734: 6731: 6729: 6726: 6724: 6723:Consumer debt 6721: 6720: 6718: 6716:Market issues 6714: 6708: 6705: 6703: 6700: 6698: 6695: 6693: 6692:Fund of funds 6690: 6688: 6685: 6683: 6680: 6678: 6675: 6673: 6670: 6668: 6665: 6663: 6660: 6658: 6655: 6653: 6650: 6648: 6645: 6643: 6640: 6639: 6637: 6633: 6627: 6624: 6622: 6619: 6617: 6614: 6612: 6609: 6607: 6604: 6602: 6599: 6598: 6596: 6594: 6590: 6584: 6581: 6579: 6576: 6574: 6571: 6569: 6566: 6564: 6561: 6559: 6556: 6554: 6551: 6549: 6546: 6544: 6541: 6539: 6536: 6534: 6533:Forward price 6531: 6529: 6526: 6524: 6521: 6519: 6516: 6514: 6511: 6509: 6506: 6505: 6503: 6498: 6495: 6493: 6490: 6489: 6486: 6480: 6477: 6475: 6472: 6470: 6467: 6465: 6462: 6460: 6457: 6455: 6452: 6450: 6447: 6445: 6444:Interest rate 6442: 6440: 6437: 6435: 6432: 6430: 6427: 6425: 6422: 6420: 6417: 6415: 6412: 6410: 6407: 6405: 6402: 6400: 6397: 6395: 6392: 6390: 6387: 6385: 6382: 6380: 6377: 6375: 6372: 6371: 6369: 6367: 6363: 6353: 6350: 6348: 6345: 6343: 6340: 6338: 6337:MC Simulation 6335: 6333: 6330: 6328: 6325: 6323: 6320: 6318: 6315: 6313: 6310: 6308: 6305: 6302: 6298: 6297:Black–Scholes 6295: 6293: 6290: 6288: 6285: 6283: 6280: 6279: 6277: 6275: 6271: 6264: 6260: 6256: 6253: 6251: 6250:Risk reversal 6248: 6246: 6243: 6241: 6238: 6236: 6233: 6231: 6228: 6226: 6223: 6221: 6218: 6216: 6213: 6211: 6208: 6206: 6203: 6201: 6198: 6196: 6193: 6191: 6188: 6186: 6183: 6181: 6180:Credit spread 6178: 6176: 6173: 6171: 6168: 6166: 6163: 6161: 6158: 6156: 6153: 6151: 6148: 6146: 6143: 6142: 6140: 6138: 6134: 6128: 6125: 6123: 6120: 6118: 6115: 6112: 6110: 6107: 6105: 6104:Interest rate 6102: 6100: 6099:Forward start 6097: 6095: 6092: 6090: 6087: 6085: 6082: 6080: 6077: 6075: 6072: 6070: 6067: 6065: 6062: 6060: 6057: 6055: 6052: 6051: 6049: 6047: 6043: 6037: 6034: 6032: 6029: 6027: 6026:Option styles 6024: 6022: 6019: 6017: 6014: 6012: 6009: 6007: 6004: 6002: 5999: 5997: 5994: 5992: 5989: 5988: 5986: 5984: 5980: 5974: 5971: 5969: 5966: 5964: 5961: 5959: 5956: 5954: 5951: 5949: 5946: 5944: 5943:Open interest 5941: 5939: 5936: 5934: 5931: 5929: 5926: 5924: 5923:Delta neutral 5921: 5920: 5918: 5914: 5911: 5909: 5905: 5901: 5896: 5892: 5885: 5880: 5878: 5873: 5871: 5866: 5865: 5862: 5855: 5852: 5849: 5846: 5843: 5842:CFA Institute 5839: 5835: 5831: 5830: 5826: 5823: 5820: 5817: 5813: 5812: 5808: 5807: 5803: 5798: 5794: 5790: 5785: 5780: 5775: 5770: 5766: 5760: 5756: 5751: 5747: 5741: 5737: 5732: 5728: 5722: 5718: 5713: 5709: 5703: 5699: 5694: 5690: 5685: 5681: 5677: 5673: 5669: 5665: 5661: 5656: 5652: 5648: 5644: 5640: 5636: 5632: 5627: 5622: 5618: 5614: 5607: 5602: 5598: 5594: 5590: 5586: 5582: 5578: 5574: 5570: 5563: 5558: 5557: 5553: 5537: 5533: 5526: 5523: 5510: 5506: 5500: 5497: 5484: 5480: 5474: 5472: 5470: 5468: 5466: 5462: 5454: 5448: 5445: 5432: 5427: 5426:public domain 5416: 5414: 5412: 5410: 5406: 5398: 5392: 5389: 5376: 5372: 5368: 5361: 5358: 5345: 5338: 5336: 5332: 5329: 5323: 5320: 5317: 5311: 5308: 5304: 5300: 5294: 5291: 5286: 5282: 5278: 5274: 5270: 5266: 5262: 5255: 5252: 5239: 5235: 5231: 5225: 5222: 5217: 5211: 5207: 5206: 5198: 5195: 5190: 5183: 5176: 5173: 5168: 5164: 5157: 5154: 5142:. Reuters.com 5141: 5134: 5131: 5126: 5122: 5118: 5114: 5109: 5104: 5100: 5096: 5092: 5088: 5082: 5079: 5074: 5070: 5063: 5060: 5048: 5042: 5039: 5026: 5020: 5017: 5004: 5000: 4994: 4991: 4986: 4982: 4975: 4972: 4967: 4966: 4961: 4957: 4951: 4948: 4943: 4939: 4935: 4931: 4927: 4923: 4919: 4915: 4914: 4906: 4903: 4898: 4885: 4866: 4859: 4852: 4849: 4845: 4839: 4836: 4832: 4826: 4823: 4820: 4815: 4812: 4809: 4805: 4800: 4797: 4781: 4777: 4773: 4766: 4759: 4756: 4743: 4739: 4735: 4729: 4726: 4721: 4717: 4714:: 1019–1051. 4713: 4709: 4705: 4704:Frank Partnoy 4699: 4696: 4684: 4681:Sirri, Erik. 4677: 4674: 4658: 4654: 4647: 4640: 4638: 4634: 4622: 4618: 4614: 4610: 4606: 4602: 4595: 4588: 4585: 4572: 4568: 4562: 4559: 4555: 4551: 4548: 4543: 4540: 4524: 4520: 4513: 4507: 4504: 4499: 4498:FT Alphaville 4495: 4488: 4485: 4482:, 2011, p.133 4481: 4476: 4473: 4470:, 2011, p.130 4469: 4464: 4461: 4457: 4452: 4449: 4445: 4441: 4435: 4432: 4428: 4422: 4420: 4416: 4411: 4407: 4403: 4402:Working Paper 4396: 4393: 4389: 4383: 4380: 4375: 4362: 4358: 4343: 4336: 4329: 4326: 4313: 4306: 4299: 4296: 4283: 4279: 4273: 4270: 4258: 4254: 4247: 4244: 4240: 4236: 4231: 4228: 4224: 4223: 4217: 4213: 4209: 4205: 4199: 4196: 4188: 4181: 4179: 4177: 4175: 4171: 4168: 4162: 4160: 4156: 4151: 4147: 4140: 4137: 4134: 4128: 4125: 4120: 4116: 4112: 4108: 4103: 4098: 4094: 4090: 4083: 4080: 4077: 4073: 4068: 4065: 4061: 4055: 4052: 4046: 4043: 4039: 4035: 4029: 4026: 4023: 4019: 4013: 4010: 4002:September 14, 3998: 3992: 3988: 3984: 3983: 3978: 3971: 3968: 3960:September 14, 3956: 3950: 3946: 3942: 3938: 3934: 3927: 3924: 3920: 3914: 3911: 3903:September 14, 3899: 3893: 3889: 3885: 3881: 3877: 3870: 3867: 3862: 3855: 3852: 3847: 3846: 3839: 3836: 3823: 3822:The Economist 3819: 3813: 3810: 3797: 3796:The Economist 3793: 3787: 3784: 3771: 3764: 3763: 3756: 3753: 3748: 3742: 3738: 3734: 3727: 3724: 3712: 3708: 3702: 3699: 3682: 3681:The Economist 3678: 3672: 3669: 3657: 3656: 3651: 3644: 3641: 3636: 3632: 3625: 3623: 3619: 3614: 3608: 3604: 3600: 3594: 3591: 3586: 3580: 3576: 3569: 3567: 3565: 3563: 3561: 3557: 3545: 3543:9780471129943 3539: 3535: 3534: 3526: 3523: 3518: 3514: 3507: 3504: 3501: 3497: 3492: 3489: 3485: 3473: 3469: 3465: 3459: 3456: 3450: 3445: 3442: 3440: 3437: 3435: 3432: 3430: 3427: 3425: 3422: 3420: 3417: 3415: 3412: 3410: 3407: 3405: 3402: 3400: 3397: 3395: 3392: 3391: 3386: 3381: 3377: 3373: 3369: 3365: 3361: 3357: 3353: 3350: 3346: 3343: 3340: 3337: 3334: 3330: 3327: 3324: 3320: 3316: 3312: 3309: 3305: 3301: 3297: 3294: 3290: 3287: 3283: 3279: 3276: 3273: 3270: 3267: 3264: 3263: 3259: 3257: 3255: 3251: 3249: 3245: 3241: 3233: 3231: 3227: 3224: 3220: 3216: 3212: 3207: 3199: 3194: 3190: 3187: 3186:Mary Schapiro 3181: 3179: 3173: 3171: 3167: 3162: 3158: 3155: 3150: 3146: 3142: 3137: 3135: 3126: 3124: 3122: 3114: 3112: 3111: 3107: 3103: 3099: 3089: 3086: 3082: 3079: 3075: 3072: 3068: 3065: 3061: 3058: 3054: 3050: 3046: 3042: 3038: 3035: 3034: 3033: 3032: 3031: 3028: 3024: 3018: 3012: 3004: 3002: 3000: 2996: 2992: 2989:According to 2984: 2982: 2980: 2976: 2972: 2964: 2962: 2958: 2956: 2952: 2948: 2944: 2940: 2935: 2933: 2927: 2919: 2917: 2910: 2905: 2904: 2899: 2896: 2893: 2890: 2889: 2888: 2882: 2876: 2869: 2867: 2865: 2857: 2854: 2849: 2846: 2842: 2839: 2838:risk aversion 2835: 2832: 2828: 2824: 2823: 2822: 2816: 2814: 2812: 2808: 2804: 2800: 2796: 2791: 2787: 2782: 2780: 2776: 2772: 2768: 2764: 2760: 2756: 2752: 2747: 2745: 2741: 2737: 2733: 2729: 2725: 2721: 2717: 2714: 2710: 2702: 2700: 2698: 2693: 2689: 2685: 2679: 2677: 2669: 2666: 2662: 2659: 2658: 2657: 2655: 2651: 2646: 2642: 2638: 2634: 2630: 2626: 2625: 2620: 2612: 2610: 2607: 2603: 2599: 2595: 2590: 2588: 2584: 2580: 2576: 2572: 2568: 2564: 2560: 2556: 2552: 2548: 2544: 2542: 2538: 2529: 2527: 2525: 2521: 2517: 2512: 2510: 2506: 2500: 2498: 2494: 2490: 2486: 2485:delivery date 2482: 2481:futures price 2478: 2474: 2470: 2462: 2460: 2458: 2454: 2450: 2446: 2441: 2439: 2435: 2431: 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1970: 1966: 1962: 1959: 1956: 1952: 1949: 1946: 1943: 1940: 1936: 1932: 1928: 1924: 1920: 1916: 1912: 1909: 1906: 1902: 1899: 1896: 1893: 1892: 1891: 1885: 1883: 1881: 1877: 1873: 1869: 1865: 1860: 1852: 1850: 1848: 1844: 1840: 1836: 1832: 1828: 1824: 1821:(which lists 1820: 1816: 1811: 1807: 1800: 1798: 1796: 1792: 1788: 1784: 1779: 1775: 1771: 1766: 1764: 1760: 1756: 1752: 1748: 1744: 1737: 1735: 1729: 1727: 1720: 1718: 1716: 1708: 1706: 1704: 1700: 1696: 1692: 1687: 1684: 1676: 1674: 1671: 1667: 1658: 1654: 1649: 1645: 1643: 1638: 1634: 1632: 1628: 1623: 1620:could sign a 1619: 1616:farmer and a 1615: 1609: 1601: 1599: 1597: 1593: 1588: 1586: 1582: 1578: 1574: 1562: 1559: 1551: 1541: 1537: 1533: 1527: 1526: 1522: 1517:This section 1515: 1511: 1506: 1505: 1499: 1494: 1490: 1487: 1483: 1479: 1475: 1473: 1469: 1468:asset classes 1465: 1461: 1458: 1455: 1452: 1448: 1445: 1441: 1438: 1434: 1431: 1427: 1424: 1423: 1422: 1416: 1414: 1412: 1408: 1403: 1399: 1395: 1393: 1389: 1384: 1383: 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