How the Trading Floor Really Works

The Deal Origination

Tailored derivatives or structured products are often driven by a particular need on the part of the client. Tailored derivatives are often traded with clients such as corporates who have specific financial risk to manage, such as long-term currency risk or an interest rate mismatch. The banks provide a very important role in intermediating between the tailored derivative and the standard derivative product. In these cases the client rather than the bank is generally the driver of the transaction because it is a specific risk that the client needs to manage.

Structured product is a term generally associated with a bond which has a tailored derivative embedded in it that is created by a bank specifically for an investment ...