Risk Management With Derivatives: Does It Really Work?

RISK MANAGEMENT IN THE GLOBALIZED WORLD: DERIVATIVES MARKETS

INTRODUCTION

The upcoming book which was titled “Risk Management in the Globalized World: Derivatives Markets” will try to make an effort on minimizing the risk with derivatives markets in the complex financial system. All of the participants of the economy could face risks that could present threats to their success. Risk is defined as the possibility of something bad happening at some time in the future. Financial risk management focuses on which risks should be dealt with and implementing financial tools to deal with those risks. Businesses that identify the risks will be better prepared in dealing with them. Derivatives markets are one of the most important tools that can be used to manage financial risk. 

OBJECTIVE

Our book, entitled “Risk Management in the Globalized World: Derivatives Markets” focuses on four topics that have great importance for economists, risk managers, companies, central banks, and governments. These topics are “derivatives markets and economic development”, “globalization of risk and hedging with derivatives”, “crypto derivatives” and “legal aspects of derivatives markets”.

Derivatives markets have a significant role in the financial system and overall economy. It’s also well known that the way how the central banks use the derivative markets while implementing their monetary and exchange rate policies. Most of the studies point out how the presence of derivatives markets affects the stability and the efficiency of economies. Within this framework, in the first section, we plan to include studies about how derivatives markets play important role in the economy and how they are used by the Central Banks in the conduct of macroeconomic policy.

Financial products are bought and sold by the means of computer keystrokes in a part of the world and affect the price of an asset or a commodity in the other part of the world. Parallel to the speed of globalization in the economies, derivatives markets have been growing exponentially. According to the most recent data from the Bank for International Settlements (BIS), the total notional amounts outstanding for contracts in the derivatives market is an estimated $542.4 trillion. Present times, all of the participants of the economy exposed to different types of risks like interest rate, currency rate, etc. Derivatives markets have an enormous impact on the economies because of its two important purposes which are “hedging” and “price discovery of assets or commodities”. To this end, in the second section, we aim to admit studies about the globalization of risk and the management of this risk with derivatives markets.

Today in the cryptocurrency market there are more than 2,000 coins and tokens. With emerging use cases with each passing day, the finance sector is actively seeking new areas and applications of the blockchain technology. One of the most important areas in the finance sector related to blockchain technology is crypto derivatives. The most common form of cryptocurrency derivatives at the moment is Bitcoin futures. We will try to focus on the studies on how to accelerate the advancement of the cryptocurrency financial system. Therefore, the studies on the cryptocurrency derivatives market, pricing and financial modeling in these markets are will be the main subject of the third chapter on the book.

The fourth chapter of the book will focus on the legal aspects of derivatives. Financial law, taxation on derivatives markets, regulations on cryptocurrency derivatives or how to recognize a derivative instrument in the balance sheet will be the main subjective of the fourth chapter on the book.

As a result, the purpose of our book is to bring together the studies of academicians and researchers who are component in their fields. Yet we aim to enlighten the readers and make a recommendation for policymakers to reduce these issues. 

QUESTION: Do the derivatives markets have an impact on risk management in the complex financial world?

Recommended Topics

Main Challenges/ General Topics

  1. Derivatives markets and economic development
  2. Globalization of risk and hedging with derivatives
  3. Crypto derivatives
  4. Legal aspects of derivatives markets

Main Themes

  • Derivatives markets and economic development

Derivative markets’ impact on monetary policy 

Currency crises, banking crises, money crises, debt crises

Global financial stability

The role of derivatives in financial crises

Global financial markets

The financialization of commodity markets

The derivatives markets in emerging economies

Energy prices in the emerging power markets

Global OTC derivatives markets

International derivatives markets

  • Globalization of risk and hedging with derivatives

Systematic risk

Real estate risk

Managing energy risk

Interest rate risk

Weather risk management 

Climate risk in agriculture

Agricultural risk management and global food crises

Market risk management

Volatility in financial markets

Role of financial derivatives in risk management

Uses of derivatives in portfolio management

Freight agreements, shipping derivatives, and risk management

Pricing of financial derivatives

Exchange-traded derivative contracts

Foreign Exchange markets

Foreign Exchange, interest rate, equity-linked contracts

Trading strategies

Corporate finance

The use of derivatives by insurance companies

Pension funds

Capital markets

Over the counter markets

  • Crypto derivatives

Blockchain derivatives markets

Pricing cryptocurrency derivatives markets

Accounting for blockchain derivatives

Financial modeling for blockchain derivatives

  • Legal aspects of derivatives markets

Financial law

Regulating Bitcoin and blockchain derivatives

Accounting for derivative instruments and hedging activities

History of derivative trading from Thales to present

TARGET AUDIENCE

Academics, Scholars, and experts of risk management will find in this book a useful guide to the present, future and possible solutions of derivatives markets on risk management.

The proposals and Chapter Manuscripts chosen by the editorial team will be forwarded to the double-blind review process, then if required Translation, Proofreading, Editorial and Publishing Phase will be completed.

This book project is carried out by the editors, apart from the publisher.

Editor:

Asst. Prof. M. M. Tuncer ÇALIŞKAN (mcaliskan@bandirma.edu.tr)