What are international derivatives?

International derivatives are financial tools traded across the national borders. A derivative is an object whose price is inseparably associated with the price of another object, usually with a commodity or security. Most derivatives have been available to the international community for decades, but the widespread use of the Internet for trading has caused international derivatives to be international. Futures contracts are derivatives because their price is tied to the price of a basic commodity, be it grain, oil or one of the 30 other products that were actively traded. Futures are considered international derivatives because the price is influenced by global factors. For example, heavy drought in Russia's wheat fields will send the price of wheat futures rising in Chicago, London or Shanghai and the War in the Middle East broadcasts the oil and futuresna oil prize sharply higher all over the world.

commodity futures are the oldest derivatives. Chicago Board of Trade (CBOT) was created in 1848 for tradeSingle grains and grain contracts. These contracts were soon standardized with regard to the amount of grain in every contract, grain quality, grain delivery point and a month and delivery day. Everything that remained for buyers and sellers was the price. In a breakthrough step, CBOT provided offers, offering and negotiated prices available to the public.

At the beginning of the 20th century, butter, eggs, pigs and cattle traded like futures on the Chicago Business Stock Exchange (CME). In 1971, the currencies of the world were officially de-connected from gold and CME introduced futures on currencies, the first internal international derivatives. Futures now include themeal, weather, expensive metal, oil, financial and many others and are traded all over the Internet. Transparency of discovering prices, knowing how many contracts are outstanding at the moment, and the ability of regulatory organs to monitor transactions to prevent fraud or violation of rules, created the market for internationalRemains derivatives in which the world is willing to participate.

Collateralized debt offers (CDO) created by banking and insurance giants from the end of 20 years and at the beginning of the 21st century are also international derivatives. Unlike public markets, these markets were unregulated and poorly documented. No banker knew how large the market was, the fraction of the nominal value was represented by the actual collateral, or whether the counterattack in the case of an emergency was able to carry out counter -trade. The CDO market, opaque, unregulated and without a central billing house, such as those who have provided the success of regulated international derivatives, quickly collapsed with potentially catastrophic results for the economies of the world.