Speculative financial instruments – derivatives
OVERVIEW OF DERIVATIVES MARKETS
So far we have discussed the financial instruments used mainly for borrowing and investment of principal both short term (money market) and long term (capital market). Those securities appear on clients’ and banks’ balance sheets and can ‘block up’ the credit lines. Most market participants have exposure limits in each product sector and once those are exhausted no further funds can be utilised. To overcome this problem they can trade ‘off-balance sheet’ instruments that do not involve exchange of principal, more commonly ...