Derivative security

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Derivative security

A financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying asset.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Derivative Security

Futures, forwards, options, and other securities except for regular stocks and bonds. The value of nearly all derivatives are based on an underlying asset, whether that is a stock, bond, currency, index, or something else entirely. Derivative securities may be traded on an exchange or over-the-counter. Derivatives are often traded as speculative investments or to reduce the risk of one's other positions. Prominent derivative exchanges include the Chicago Mercantile Exchange and Euronext LIFFE.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
As part of a second phase, Banco Original will include additional debt, treasury and derivatives instruments, enabling clients to invest in a broad portfolio of financial products, including money market, government bonds, debentures, swaps, derivatives and structured operations certificates (COEs).
Volumes for ICE Low Sulphur Gasoil related derivatives instruments, such as the ICE Low Sulphur Gasoil First Line crack vs Brent future, have seen increased growth in recent months with many related contracts achieving record volumes.
While the production, investment, and pricing of many commodities that play a large role in many Muslim countries' economies are affected by the use of derivatives instruments for risk management and trading in the international market, these derivative instruments generally evolved in non-Islamic environments and systematic study of their noncompliance or disharmony with precepts of Islamic finance is necessary if they are to be adopted by Muslime economies.
The BFX regulated by the Central Bank of Bahrain (CBB) has been given approval to list cash and derivatives instruments on multiple asset classes such as currencies, commodities, equity and debt related products for trading and clearing by its brokers.
133, Accounting for Derivatives Instruments and Hedging Activities.
''All the liabilities including debentures, deposits, interbank transactions, and derivatives instruments will continue to be fully protected,'' it said.
Question 2 of the survey asks firms to indicate their use of particular types of derivatives instruments to manage exposure across four broad classes of financial price risk: foreign currency, interest rate, commodity, and equity risk.
And anecdotal evidence prior to 1994 suggested that improper derivatives instruments were being sold to some widow and orphan multinationals.
With regard to derivatives instruments, the expertise required to manage prudently the writing of over-the-counter derivatives, a business dominated by banks, is similar to that required for using exchange-traded futures and options, instruments used extensively by both commercial and investment banks.