Derivatives Market
| The derivatives market is a public market that deals in derivatives. Derivatives are financial instruments that derive their value from an underlying asset. The most common types of derivatives are futures, options, and swaps. The derivatives market is a vital part of the global financial system. It provides a way for investors to hedge their risk and for businesses to manage their exposure to volatile prices. The market is also a source of liquidity, which is essential for the smooth functioning of the financial system. The size of the derivatives market has grown rapidly in recent years. The value of all outstanding derivatives contracts was estimated at $700 trillion at the end of 2019, up from $500 trillion in 2017. This growth has been driven by the increasing use of derivatives by businesses and investors, as well as by the development of new types of derivatives. The derivatives market is regulated by national and international bodies. In the United States, the market is overseen by the Commodity Futures Trading Commission (CFTC). The CFTC is responsible for ensuring that the market is fair and transparent, and that participants are protected from fraud and manipulation. The derivatives market plays an important role in the global economy. It provides a way for businesses and investors to manage risk and exposure to volatile prices. The market is also a source of liquidity, which is essential for the smooth functioning of the financial system. |
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