Derivatives: Practices and Principles
by: Global Derivatives Study Group
1993, 30 pages
Type: Special Report
ISBN: 1-56708-901-1
Price: $50.00
Keywords: Derivatives
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This study is the Group of Thirty’s groundbreaking work on derivatives published in 1993. Even now, over a decade later, the report is used as a standard text by those students, practitioners and market participants who want to understand derivative market. It remains a Group of Thirty bestseller.
The report was commissioned in the 1990s just as the use derivatives grew and began to move into the mainstream of finance, with these new products fundamentally changing financial management by providing new tools to manage risk. It was based on wide ranging survey of the industry.
At the time many, both inside and outside of the financial industry, were uncomfortable with derivatives activity. They saw it as complex and obscure, potentially subject to abuse that might lead to the failure of individual firms or even to a crisis in the financial system.
“Derivatives: Practices and Principles” study recognized and addressed these concerns by explaining derivatives and their uses and by formulating and disseminating recommendations about their proper management.
The distinguishing feature of this study is the practical character of its contents.
Other studies of derivatives had been conducted by academics or supervisors; “Derivatives: Practices and Principles” was conducted largely by market participants who understood the nature of the products and the new market that had been created.
It explains in relatively plain language what derivatives are, the needs they serve, their risks, and their relationship to traditional financial instruments and offers 20 recommendations to help dealers and end-users manage derivatives activity and continue to benefit from its use. The Study also recommends ways in which supervisors and regulators, for their part, can help the financial infrastructure keep up with derivatives activity.