Book description
Through the eyes of an inventor of new markets, Good Derivatives: A Story of Financial and Environmental Innovation tells the story of how financial innovation – a concept that is misunderstood and under attack - has been a positive force in the last four decades. If properly designed and regulated, these "good derivatives" can open vast possibilities to address a variety of global problems. Filled with provocative ideas, fascinating stories, and valuable lessons, it will provide both an insightful interpretation of the last forty years in capital and environmental markets and a vision of world finance for the next forty years.
As a young economist at the Chicago Board of Trade, Richard Sandor helped create interest rate futures, a development that revolutionized worldwide finance. Later, he pioneered the use of emissions trading to reduce acid rain, one of the most successful environmental programs ever. He will provide unique insights into the process of creating these new financial products. Covering successes and failures, the story describes the tireless process of inventing, educating and creating support for these new inventions in places like Chicago, New York, London, Paris and how it is unfolding today in Mumbai, Shanghai and Beijing.
The book will tell the story of the creation of the Chicago Climate Exchange and its affiliated exchanges (European Climate Exchange, Chicago Climate Futures Exchange and Tianjin Climate Exchange, located in China). The lessons learned in these markets can play a critical role in effectively addressing global climate change and other pressing environmental issues. The author argues that market-based trading systems are a far more effective means of reducing pollutants than "command-and-control". Environmental markets may ultimately help to find solutions to issues such as rainforest destruction, water problems and biodiversity threats.
Written in an engaging, narrative style, Good Derivatives will be of interest to both practitioners and general readers who want to better understand the creative process of financial innovation. In the middle of so much distrust of markets, it is also a recipe of how transparent, well-regulated markets can be a force for good in the environmental, health, and social areas.
Table of contents
- Cover Page
- Title Page
- Copyright
- Dedication
- Contents
- Foreword
- Preface
- Acknowledgments
- Chapter 1: The Early Years
- Chapter 2: Trying to Change the World
- Chapter 3: The Berkeley Years
- Chapter 4: The Chicago Board of Trade Years
-
Chapter 5: The Chicago Board of Trade Years
- How GNMAs Work
- Drafting GNMA Futures
- Selling the Concept to Financial Institutions
- Enabling Legislation and Regulation for GNMA Futures
- Transparent Markets—Greetings from the Grim Reaper
- The GNMA Contract: Simple in Concept, Complex in Detail
- The First Financial Good Derivative—GNMA Mortgage Interest Rate Futures
- Contracts without Lawyers
- Her Name was Ginnie Mae
- The Economic Benefits of GNMA Futures
- Moving On
- Chapter 6: Educating Users and Building the Market
- Chapter 7: Treasury Bond and Note Futures
- Chapter 8: The Decade of the Eighties
- Chapter 9: Globalizing Chicago Exchanges
- Chapter 10: Environmental Finance
- Chapter 11: Blame It on Rio
- Chapter 12: The Beginning of the Entrepreneurial Years
- Chapter 13: You're Gonna Trade What?
- Chapter 14: From the Pit to the Box
- Chapter 15: Conceiving a New Kind of Exchange
- Chapter 16: The Twenty-First-Century Lighthouse
- Chapter 17: CCX Market Architecture
- Chapter 18: Chicago Climate Exchange
- Chapter 19: The Rise of the Chicago Climate Exchange
- Chapter 20: The Fall of the Chicago Climate Exchange
- Chapter 21: The Chicago Climate Futures Exchange
- Chapter 22: The European Climate Exchange
- Chapter 23: India
-
Chapter 24: Opening New Markets in China
- First Encounter with China
- Satellite Broadcasts
- An Opportunity Arises
- Returning to China
- In Search of the Perfect Exchange Partner
- A Turn of Fortune
- The Birth of the Tianjin Climate Exchange
- Raising TCX
- The Opening of TCX
- The World Is Getting Flatter!
- The People's Bank of China
- A Postscript on China
- Chapter 25: Good Derivatives
-
Appendixes
- Appendix A: Commodity Exchange Operating System, 1969
- Appendix B: GNMA Advisory Committee
- Appendix C: CBOT Financial Instruments Committee, 1975
- Appendix D: CBOT Financial Instruments Committee, 1977
- Appendix E: CBOT Financial Instruments Committee, 1982
- Appendix F: CCX Committees
- Appendix G: CCX Subcommittees
- Appendix H: CCX Members
- Acronyms
- Glossary
- Index
Product information
- Title: Good Derivatives: A Story of Financial and Environmental Innovation
- Author(s):
- Release date: April 2012
- Publisher(s): Wiley
- ISBN: 9780470949733
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