Equity derivatives products pdf

As a metric, this provides information around the total size of a product with a counterparty. Under an equity swap contract, an investor pays the total return on a stock to his counterparty and receives in return a floating rate of interest. New coverage is added constantly to meet changing market activity and client needs. The workbook is available for free download in pdf format after login. Discover our offers, our full range of financial savings products and all our services. With this equity swap, the investor can hedge his equity position without giving up ownership of his share. Equity derivative product support markitserv supports all key equity derivatives products and trade lifecycle events.

Innovations in the derivatives markets, which optimally combine the risks and returns over a large number of financial assets leading to higher returns, reduced risk as well as transactions costs as compared to individual financial assets. For example, a stock option is an equity derivative, because its value is based on the price movements of the underlying stock. Examples of provisions for inclusion in confirmations to document specific types of overthecounter equity derivative transactions can be obtained from the isda website. There exist a variety of equityrelated derivative securities. Top 5 in 2000s rank year company a company b value usd 1 2000 aol time warner 164,747,000,000 2 2007 rbs, fortis, santander abn amro 95,500,000,000. Derivatives markets, products and participants bis. An equity derivative is a derivative instrument with underlying assets based on equity securities. This toolbox provides functionality to price, compute sensitivity and. A large number of different types of derivative securities have become very important for management of a variety of different types of equityrelated risks. Options option strategies variance swaps dividend swaps basket swaps portfolio swaps accumulators swaps equity products index and share. Pdf the equity derivatives are an agreement or a derivative whose value is gotten from other underlyin equity securities.

Discount expected pay off to today v e r t s e rt k 0 e forward t. An equity derivative is a contract whose value is at least partly derived from one or more underlying equity securities. Derivatives and risk management made simple jp morgan. Below are more details on specific aspects of the 2002 isda equity derivatives definitions. An equity derivative is a financial instrument whose value is based on equity movements of the underlying asset. Equity derivatives products natixis equity derivatives. An equity derivative s value will fluctuate with changes in its underlying. Other commonly traded equity derivatives are equity swaps.

Emaps, etransac, our actively managed certificates and the nxs indice. In the class of equity derivatives the world over, futures and. Forward value based on expectation e s k e s k t s k 1. The examination aims to enable a better understanding of various derivatives products available in commodity derivatives markets, regulations and risks associated with the products and the exchange mechanisms of trading, clearing and settlement. If you have big picture some insight into common products it might be easy to understand the other. Calculate expectation of forward pay off e t t t 0 2. An introduction a derivative security is simply a financial instrument whose value is derived from that of another security, financial index or rate. The emergence of the market for derivative products, most notably forwards, futures and options, can be.