Download presentation

Presentation is loading. Please wait.

Published byLuc Sollinger Modified over 3 years ago

2
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 1 Demystifying Derivatives Warren Edwardes ceo, Delphi Risk Management Limited

3
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 2 Author of Key financial instruments: –understanding and innovating in the world of derivatives

4
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 3 Famous cases: Barings – founded in 1763 – crashed through lack of control of derivatives

5
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 4 Famous cases: Equitable Life – founded in 1762 – crashed through not using derivatives to manage interest rate risk – boards have been successfully sued for not using derivatives to manage risk

6
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 5 So what’s a derivative? a financial market derivative instrument is derived from other cash market instruments or other derivatives. the majority of financial instruments are not new instruments. They are merely combinations of derivatives and/or standard cash market instruments the building block approach

7
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 6 Examples of derivatives - commodities orange juice futures

8
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 7 Examples of derivatives - commodities Oil futures have liquid trading homogenous product

9
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 8 Examples of derivatives - commodities Coffee a liquid market fairly standardised

10
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 9 Examples of derivatives - commodities wine ?? Not homogeneous not customer needs driven Paris market unlikely to survive

11
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 10 Examples of derivatives - commodities property / real estate ?? Not homogeneous FOX property market failed in 1991

12
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 11 Examples of derivatives - shares? A share is an option on the assets of a firm

13
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 12 Examples of derivatives - retail financial products foreign exchange notes

14
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 13 Examples of derivatives - retail financial products fixed rate mortgages

15
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 14 Examples of derivatives - retail financial products equity index linked savings

16
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 15 Examples of derivatives - retail financial products Insurance?

17
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 16 4 key financial building blocks spot –the now contract - like exchanging Pounds for Pesetas in the high street forward –you could buy your Euros in the forward market; payment and delivery next year. deposit –you could borrow money, buy the Euros now (spot) and deposit the Euros. option –Equitable Life gave interest rate guarantees - but didn’t manage the risk!

18
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 17 Conclusion: what’s a derivative? a financial market derivative instrument is derived from other cash market instruments or other derivatives. the majority of financial instruments are not new instruments. They are merely combinations of derivatives and/or standard cash market instruments remember the building block approach

19
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 18 And finally! Beware of insider trading underlying price manipulation –credit derivatives terrorists selling put options on American Airlines!

20
Demystifying Derivatives Warren Edwardes we@dc3.co.uk 19 Demystifying derivatives by Warren Edwardes

Similar presentations

OK

1 Outline Definition Types of derivatives Participants in the derivatives world Uses of derivatives.

1 Outline Definition Types of derivatives Participants in the derivatives world Uses of derivatives.

© 2018 SlidePlayer.com Inc.

All rights reserved.

Ads by Google

Ppt on food adulteration in india Ppt on aviation industry in india for presentation Ppt on drinking water problems in rural areas Ppt on art of war pdf Ppt on modern periodic table for class 10 Free ppt on french revolution Ppt on introduction to object-oriented programming vs procedural programming Pdf to ppt online without email Ppt on l&t finance stock price Ppt on accidents in india