Open AccessCzech derivatives market becomes more liquid
Author(s) -
Josef Jílek
Publication year - 1996
Publication title -
prague economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.233
H-Index - 17
eISSN - 2336-730X
pISSN - 1210-0455
DOI - 10.18267/j.pep.116
Subject(s) - business , foreign exchange swap , currency , subsidiary , hedge , equity (law) , financial system , private placement , foreign exchange market , commerce , finance , monetary economics , economics , investment banking , multinational corporation , ecology , law , political science , biology
In the last a few years, the volume of derivatives trading steadily increased, the market being built, in particular, by major Czech banks (including subsidiaries of foreign banks) and branches of foreign banks. The most common derivatives are currency forwards and currency swaps up to 6 months. They are used by banks for trading (i.e. purchase or sale with other banks or clients) and hedging foreign exchange positions. More and more clients demand these instruments to hedge their own operations, mainly foreign trade and short-term loans. Equity options have so far been used to buy securities through major securities dealers who sell options to foreign investors. Some banks offer currency options to their clients. But clients have small expertise how to handle with options e.g. how to do effective option hedging.