Deutsche Börse and its subsidiary, international derivatives exchange Eurex, have published a white paper entitled: The Global Derivatives Market - An Introduction, which discusses th

Deutsche Börse and its subsidiary, international derivatives exchange Eurex, have published a white paper entitled: The Global Derivatives Market - An Introduction, which discusses the fundamentals and characteristics of the derivatives market as well as the imperatives for its good functioning.

The two institutions note that recent market turmoil has again highlighted the importance of a sound and
well-functioning financial market organisation, and that consequently market transparency and effective risk management are key aspects of the current public debate to improve market integrity and efficiency.

Among the key findings of the white paper are that the derivatives market has grown by around 24 per cent annually over the past decade to reach a current size of a notional amount outstanding of EUR457trn, of which Europe has a 44 per cent global market share. Over-the-counter trading accounting for 84 per cent and on-exchange trading represents 16 per cent of the notional amount outstanding.

The authors conclude that structural changes are not necessary in the framework under which the
derivatives market operates today in a global environment. In contrast to other financial market segments, such as structured credit-linked securities, the derivatives market has proven resilient and reliable during the recent market turmoil.

The paper concludes that the major economic function of efficient risk allocation is fulfilled effectively, and the on-exchange segment in particular strengthens financial market integrity with central counterparty clearing services that provide effective risk management.

A copy of the white paper is available by clicking here.