Global Derivatives Market

Abstract

Globalization of financial markets led to the enormous growth of volume and diversification of financial transactions. Financial derivatives were the basic elements of this growth. Derivatives play a useful and important role in hedging and risk management, but they also pose several dangers to the stability of financial markets and thereby the overall economy. Derivatives are used to hedge and speculate the risk associated with commerce and finance.

Keywords

• financial derivatives
• leverage
• risk management
• hedge
• speculation
• organized exchange
• over-the counter market