Friday, February 21, 2014

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The derivatives market is the financial market for derivatives, financial instruments like futures contracts or options, what one. are derived from other forms of possessions.
The market can be divided into pair, that for exchange-traded derivatives and that conducive to over-the-counter derivatives. The lawful nature of these products is remarkably different as well as the room for passing they are traded, though many market participants are active in both.

Futures markets[edit]
Main article: Futures exchange
Futures exchanges, such as Euronext.liffe and the Chicago Mercantile Exchange, trade in standardized derivative contracts. These are options contracts and futures contracts without ceasing a whole range of underlying products. The members of the give and take reciprocally hold positions in these contracts by the exchange, who acts as central counterparty. When unit party goes long (buys a futures arrangement), another goes short (sells). When a of recent origin contract is introduced, the total pro~ in the contract is zero. Therefore, the quantity of money of all the long positions new wine be equal to the sum of quite the short positions. In other logomachy, risk is transferred from one detachment to another. The total notional footing up of all the outstanding positions at the end of June 2004 stood at $53 trillion. (origin: Bank for International Settlements (BIS): [1]). That outline grew to $81 trillion by the cessation of March 2008 (source: BIS [2])
Over-the-contrariwise markets[edit]
Tailor-made derivatives, not traded put ~ a futures exchange are traded forward over-the-counter markets, also known in the same proportion that the OTC market. These consist ofinvestment banks who bring forth traders who make markets in these derivatives, and clients of that kind as hedge funds, commercial banks, management sponsored enterprises, etc. Products that are ever traded over-the-counter are swaps, hasten rate agreements, forward contracts, credit derivatives, accumulators etc. The sum ~ notional amount of all the owing positions at the end of June 2004 stood at $220 trillion. (originator: BIS:[3]). By the end of...

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