Juridical Analysis of Derivative Instruments

Abstract

Financial derivative instruments, which are created by financialexperts, play an important role in the world of high finance. To dealwith the risk, mainly price risk, these instruments have appeared andbegun to change and promote day in, day out. Their importance mayappear when it happens to them to be published more than basestock; great sum of money would be transferred by and ends bypaying the difference in price, not caring for contents of contract.This research paper tends to have a juridical analyse over theseinstruments. Explaining these instruments, first their legal naturewould be identified and then, juridical judgement would be inferred.Most of the instruments which are created to satisfy the requirementsof economic agents can be revised by law. May be, these instrumentsare misused, but this is incidental, as it may happen about otherlegitimate instruments like principle of commerce.

Keywords

• financial market
• financial derivative instruments
• forward contract
• future contract
• commodity option
• swaps
• primary market
• secondary market
• warrant
• convertible securities