New financial derivatives on Romanian market - contracts for difference

Investors’ motivation on derivatives market is a profit gain under the law of “buy cheap and sell expensive” no matter the order in which the two operations succeed. Contracts for difference are a good option for short-term investment. The possibility to trade very cheap, relatively simple mechanism of trading and permanent marking to market make the CFD perfect tools for short-term speculators. The investments in CFD aren’t suitable for any investor. Depending on the risks that the investor wants to assume and the knowledge he acquired so far, the decision to invest in CFD can be taken. The permanent increase of the derivatives number has the role to enable a large number of participants to find the right product for everybody.financial derivatives, emerging market, futures market

Developments of credit default swap contracts under the influence of global crisis

This article aims to present the overall market for credit default swaps and their regulatory trends worldwide. Over the past year and a half, the states’ interest for CDS contracts has grown significantly, due to the global crisis and especially to the speculations on sovereign risks. If for ten years the regulatory discussions on credit derivatives market were only theoretical, the current period showed that a postponement of regulations may destabilize the country's efforts to get out of recession.credit derivatives, credit default swap market, global crisis

The global derivatives trend in 2008

The global crisis put under question the economical theories about capital markets. Financial derivatives create problems for the legal context of these markets as well as for the way in which such financial instruments can be controlled by the final user. A derivative product may be an instrument of covering the inevitable risks from any economic activity, or may be a perfect instrument adapted to speculation. Duality is even greater as it cannot be a hedger without a speculator. The investors with high risk appetite meet the investors with risk aversion. In order to have a correct environment on the derivatives markets, regulations should establish the market rules, who should participate, how and when new instruments should appear.global crisis, capital markets, risks

Correlation between the use of derivatives products and the implementation of the monetary policy

In a developing and fluctuant world, derivatives help the investors to avoid risks and moreover to assume them when it is necesary. The trade of the derivatives contributes to the growth of liquidity of the assets’ market. For the banks, which traditionally avoid risks, this fact combined with low costs for communication and trading, lead to some potential risky investments. The materialization of monetary policy is based on the idea that the needs of the real economy are expressed through the bankimg system, and the changes of the monetary policy influence the evolution of the economy. In this way, the monetary authority has to promote a proper policy, which can lead to the achievement of its main objective – price stability. The use of derivatives made the central bank mission more difficult. The authorities have a difficult task in order to establish new methods, more powerful, for a better implementaton of the monetary policy. In a dynamic environment the equilibrium is not permanent; this is the reason why the central bank and the financial markets participants must prevent first, and then avoid the possible repairs.derivative, monetary policy, risk management, financial markets