Theoretical principles of ensuring security of banking operations with derivative financial instruments

Abstract

The article is devoted to the disclosure of the theoretical foundations of ensuring the security of banks’ operations with derivative financial instruments. Today, there are dozens of approaches to solving the problem of ensuring the security of commercial banks. However, there are no studies on the general theoretical and methodological principles of ensuring the financial security of banks’ operations with derivative financial instruments. Therefore, the article is based on the hypothesis that identification by commercial banks of existing threats related to this type of operations allows them to be avoided through the development of an appropriate system of measures. Thus, scientific explorations in this direction are relevant and promising. The study established that from a theoretical point of view, during the implementation of bank operations with derivative financial instruments, security issues should be considered in the context of ensuring the financial security of commercial banks. Regardless of the specifics of this type of banking operations, in order to guarantee the financial security of the banks that carry them out, it is necessary to apply a set of measures, which mainly include methods and tools of financial management and risk management. The specific selection of these instruments and methods depends on the type of derivative financial instruments and the purpose of its holding by a commercial bank. The financial security of commercial banks forms the general financial security of the banking system, where another instrument containing banking regulation is already in use; banking supervision and macroprudential policy. Here, when banks carry out transactions with derivative financial instruments, it is promising to consider recommendations on security issues in the organization and functioning of the risk management system, when banks of Ukraine determine the amount of credit risk for active banking transactions, in the improvement of individual standards of commercial banks, determined by the relevant safety indicators and their threshold values.

Keywords

• financial security of banking activity
• derivative financial instruments
• risk management system
• financial stability
• banking regulation
• banking supervision