Derivatives Tag

A light touch regulation of the global financial markets has now become exactly the opposite after the financial crisis in 2008. The comprehensive regulatory changes led by the US and Europe are still emerging and aiming on most part to make the markets more transparent, efficient, cost effective and safer for both professional and retail customers.

What is the impact of these regulations on the estimated over USD 700 trillion (in terms of outstanding notional amounts) global derivatives market? Amidst the uncertainty, serious costs and compliance implications of new and emerging regulations, here are my views on what will happen to the derivatives markets in coming 5 to 10 years:

Hedging is a practice which involves taking a market position to manage risks. Derivatives are often used to manage exposures to interest rate, currency, price and credit risks that corporate and financial institutions are not willing to accept on their balance sheet. What hedging solutions are available to corporate and financial institutions?