The Derivatives market is a financial market where derivatives, or financial instruments, are traded. Derivatives are contracts between two or more parties that derive their value from an underlying asset, such as stocks, bonds, commodities, currencies, interest rates, or market indexes. Derivatives are used to hedge risk, speculate, and to increase leverage.
The derivatives market is composed of exchanges, brokers, and dealers. Exchanges are regulated marketplaces where derivatives are traded. Brokers are intermediaries who facilitate the trading of derivatives between buyers and sellers. Dealers are market makers who provide liquidity to the derivatives market by quoting prices and taking the opposite side of a trade.
Some of the largest companies in the derivatives market include CME Group, Intercontinental Exchange, Eurex, and the Tokyo Financial Exchange. These companies provide a variety of derivatives products, such as futures, options, and swaps. Show Less Read more