Yes, you read that right. $596 Trillion. Thats a Trillion, with a T. [ Lets name this number RBN (Really Big Number) :) ]. Now that I have your attention, lets get to the details -
- This is the size of the derivatives market, as reported in the recent report by the Bank for International Settlements , the numbers are thus thus as on Dec '07.
- This $596 Trillion represents the notional value
Oracle of Omaha and Derivatives:
There has been much talk about Warren Buffet and Berishire's potential exposure. Someone has made good money while selling credit default swap protection on Berkshire which now costs more than Allstate! : Read here
Clearly, what is being overlooked is :
- Buffet's track record
- Berkshire has gotten $4.85 billion upfront, which he will use for dealmaking. Sweet.
Introduction to the Mathematics of Financial Derivatives (Academic Press Advanced Finance)Author: Salih N. NeftciLanguage: English Edition: 2ndProduct DescriptionThis popular text, publishing Spring 1999 in its Second Edition, introduces the mathematics underlying the pricing of derivatives. The increase of interest in dynamic pricing models stems from their applicability to practic
Sauce Bechamel is a milk based French Mother Sauce. It is used as a simple base to make popular secondary sauces such as Sauce Mornay, Cheddar Cheese Sauce, or even a simple cream sauce.
Standard Roux Recipe
4 oz/125 grams white roux
1 qt/1 L milk (Any milk will use but whole milk is preferred)
1/4 white onion, skin [...]
There has been a lot of discussion about derivatives over the past few months, and for good reason. Derivatives--a broad class of complex financial instruments--include collateralized debt obligations (securitized-mortgages) and credit default swaps, which are right at the core of our current financial crisis. It's easy to get down on derivatives because when things go wrong, they can go terribly
Sauce Veloute is a very simple member of the Five French Mother Sauces that is used for a base to make many different secondary sauces and leading sauces.
However, before you attempt to make a Veloute or any of its derivatives, it is important that you first understand how to make a roux and a liaison.
Standard [...]
Like many of the mother sauces, a well made mayonnaise is the base to an endless possibility of cold, emulsified sauces. Although now days there are many good quality commercial mayonnaise available, understanding how to make a mayonnaise is basic knowledge that every cook or chef should have. Not to mention, that with the selection [...]
US billionaire Warren Buffett call them the real 'weapons of mass destruction'. This market is worth more than $516 trillion, roughly 10 times the value of the entire world's output: it's been called the "ticking time-bomb".read more | digg story
Seeing a lot of Google queries regarding the size of the derivatives market landing at an older post of this blog, here is an update with the latest official figures (pdf) from the Bank for International Settlements (BIS.)Hold your breath, as we are not anymore talking paltry billions but TRILLIONS of whichever fiat currency.Current emergency meetings on banks and markets are still only in the sta
Hantu Laut
On 2nd October I wrote about the state of the American economy and the likely causes of the financial meltdown in America under my posting "American Get Screwed".
One of the reasons leading to the financial crisis was the use of financial derivatives. These are very complex financial instruments that not many investors understand the workings and risk involved.They are su
NSE had launched Currency Derivatives a few years back and it has taken off it a big manner in the recent past. It has now come out with the FX Market Tracker which would help traders trading in the rupee dollar forex market to keep themselves updated with the price and other details of the [...]
Location: London, UK. Date:2009-01-29 00:00:00. In today's market, credit derivatives are at the forefront of risk management. This comprehensive two-day course is for anyone who wishes to create profitable opportunities in this market through trading, arbitrage, risk management or by creating liquidity. It will provide an in-depth description of all credit products including Default Swaps, Total.
If you want to do trade outside of traditional stocks, start derivatives trading. Derivatives offer excellent returns over a period of time that is based on the performance of your assets, exchange rates, interest rates etc.
The payoff can be either in cash or assets and may vary according to performance. Apart from stocks, derivatives can [...]
Derivatives are financial instruments that are derived from other financial instruments. Examples of derivatives include forward rate agreements and futures.Derivatives can be traded over the counter or on exchanges such as Euronext.liffe.Contract performance is guaranteed by LCH.Clearnet in Aldgate. Members must demonstrate they are appropriately capitalised.
Derivatives on Individual SecuritiesNSE is having 228 securities in F&O segment. The company name and NSE code given below for reference3I Infotech Ltd. 3IINFOTECH Aban Offshore Ltd. ABAN ABB Ltd. ABB Aditya Birla Nuvo Ltd. ABIRLANUVO Associated Cement Co. Ltd. ACC Adlabs Films Ltd. ADLABSFILM AIA Engineering Ltd. AIAENG Deccan Aviation Ltd. AIRDECCAN Allahabad Bank ALBK Alok Industries Ltd. A
Derivatives on Individual SecuritiesNSE is having 228 securities in F&O segment. The company name and NSE code given below for reference3I Infotech Ltd. 3IINFOTECH Aban Offshore Ltd. ABAN ABB Ltd. ABB Aditya Birla Nuvo Ltd. ABIRLANUVO Associated Cement Co. Ltd. ACC Adlabs Films Ltd. ADLABSFILM AIA Engineering Ltd. AIAENG Deccan Aviation Ltd. AIRDECCAN Allahabad Bank ALBK Alok Industries Ltd. A
Federal Reserve Bank of New York President Timothy Geithner hosted a meeting of 17 major financial institutions who represent 90% of trading in credit derivatives, to discuss the creation of a central clearing house for credit default swaps, and automation of trading and settlement of credit derivatives, and a protocol for managing future defaults.
Mr. Geithner’s remarks came after a speech to
Financial News: Banks Part Company With Derivatives Traders
Last Update: 6/8/2008 8:10:42 PM
By Renee Schultes and Natasha de Teran
Of FINANCIAL NEWS
A London-based equity derivatives trader at Morgan Stanley (MS) has left the bank
after questions about how valuations were used in his trading book.
His exit is the latest in a series of suspensions and departures at banks [...]
Location: City, London
Salary: £50000 - £80000 per annum + Bonus+Package
Job type: Permanent
Skills: Java, Multithreading
One of the world's leading High Performance Computing Teams is looking to recruit Experienced Java Developers to work on their best in breed Exotic Equity Derivatives Trading Platform. The team makes extensive use of Stream Processing and Parallel programming to the goal
Location: The Institute of Physics, 76 Portland Place, London, UK. Date:2009-02-25 00:00:00. Book before September 30th to Receive a 20% 'Early Bird' Discount and before November 30th to receive a 10% Discount. Download a Registration Form (PDF) 25-27th February, 2009 The Ada-Lovelace Room, The Institute of Physics 76 Portland Place, London, UK This three-day course will be led by an...
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This is beautiful.......nice job James
"Ever since Berkshire Hathaway (BRK.A) reported earnings earlier in the month, a number of people have been abuzz about the “losses” generated from marking-to-market some of the derivatives on the books. Barron’s had a Q&A with short hedge fund manager Doug Kass (one of my favorite contrarian voices) where Kass said he was short BRK because of Buffett
Subprime Mortgage Credit Derivatives by Frank J. Fabozzi
Subprime mortgage bonds and ABS CDOs have become the biggest credit and risk management failure in history. Their story is one of how a small, inconsequential part of the mortgage market grew into a monster large enough to shake the very foundations of the U.S. financial system. It is a story with some elements that are old and some that
Reuters - MBIA Inc said on Monday
unrealized losses on insured derivatives skyrocketed in the
first quarter, pushing the world's largest bond insurer into a
sharp quarterly loss.
Omaha, Nebraska based Berkshire Hathaway's (NYSE: BRK.A and BRK.B) first quarter profits were dragged down 64% by $1.6 billion worth of pre tax losses related to derivatives contracts. Here's the full Q1 report from Berkshire, and a synopsis from Reuters via the New York Times. Net income fell to $940 million, or $607 a Class A share, from $2.6 billion, or $1,682, a year earlier. Operating profit
Product Description
The authentic voice of a genuine master of his craft in a full introduction to modern derivatives pricing and hedging that is clear, provocative and rich in insight and experience.
Designed for the widest audience, without sacrificing a high level of understanding, graduating from limited math to arithmetic and algebra and some calculus. Covers forwards and futures,
Product Description
Finance is one of the fastest growing areas in the modern banking and corporate world. This, together with the sophistication of modern financial products, provides a rapidly growing impetus for new mathematical models and modern mathematical methods. Indeed, the area is an expanding source for novel and relevant "real-world" mathematics. In this book, the authors describe
Nifty (April) futures turned into a premium of 17.5 points from a discount of 5.95 points and around 9.6 lakh shares were shed in open interest.Total open interest in the market was Rs61,673 crore...
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Many investors are familiar with mutual funds, stocks and bonds to a certain extent. I think a less well understood category of investments are derivatives which get their name because they are "derived from other underlying investments" or because the value of the specific derivative investment fluctuates in value based on changes in value of something else (investment values, interest rates, exchange rates, etc). There are actually only two main types of derivatives: option-based and forward-based. Either type can be traded on a recognized exchange or OTC (Over The Counter). The exchanges are public and provide for standardized, liquid contracts whereas the OTC market is private and allows for much more customization of the individual contracts between parties.Option Based
Options, Futures and Other Derivatives, Fourth Edition (Solutions Manual)期权，期货及其他衍生工具，第四版# Author:John Hull, John C. Hull# Publisher: Prentice Hall College Div # Number Of Pages: 162 # Publication Date: 1999-08-26 # ISBN-10 / ASIN: 0130148199 # ISBN-13 / EAN: 9780130148193 There are many exercises after each chapter of Hull's book and they help a lot in understanding the chapter's content and many questions are very classic. You've got to have this solution manual to know the answers! More importantly, many of the homework questions and even exam questions in my class were very similar to the exercises and I benefited a lot from having this solutions manual!
I am still convinced that the credit derivatives bomb is slowly ticking in the financial services market, ready to explode and hit all other sectors of the US and global economies. For some extra recent info on the CDS topic, read Swaps Backers Rush to Prevent 'Credit Event' from the Financial Week publication about the recent developments in credit default swap ("CDS") markets, or read The
What Created This Monster? by NYT - snip:LIKE Noah building his ark as thunderheads gathered, Bill Gross has spent the last two years anticipating the flood that swamped Bear Stearns about 10 days ago. As manager of the world’s biggest bond fund and custodian of nearly a trillion dollars in assets, Mr. Gross amassed a cash hoard of $50 billion in case trading partners suddenly demanded payment from his firm, Pimco. And every day for the last three weeks he has convened meetings in a war room in Pimco’s headquarters in Newport Beach, Calif., “to make sure the ark doesn’t have any leaks,” Mr. Gross said. “We come in every day at 3:30 a.m. and leave at 6 p.m. I’m not used to setting my alarm for 2:45 a.m., but these are extraordinary times.” Even though Mr. Gross, 63, is a ma
Bharatbook.com is proud to announce the new report “Mathematics for Derivatives” (
Without a sound understanding of the mathematical concepts, it is dangerous to enter into derivative contracts. Mathematics for Derivatives starts with bridging mathematics to ensure that students have a sound basis, teaches the mathematical principles of the underlying instruments such as forex and bonds, [...]
NYSE Euronext (NYSE: NYX) and CME Group, Inc. (NYSE: CME) announced late today that NYSE would purchase CME Group's Metals Complex. NYSE noted that trading of...
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Bharatbook.com is proud to announce the new report “Credit Derivatives, Securitizations and the New Regulatory Environment” (
Examines credit risk, how it is measured and managed, single and multi-name credit derivatives, CDSs and other credit derivatives products.
Introduction
From the Editors of Derivatives Week, this practical text answers:
What is credit risk? How is it measured, managed and transferred [...]
"Charlie and I believe Berkshire should be a fortress of financial strength" wrote Warren Buffett. That was five years before the subprime-credit meltdown. "We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside. In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." That warning was in Buffett's 2002 letter to Berkshire shareholders. He saw a future that many others chose to ignore. The Iraq war build-up was at a fever-pitch. The imagery of WMDs and a mushroom cloud fresh in his mind. Also fresh on Buf
Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.By: AnonymousPosted: 14-2-2008So as to bring you up to speed on what's happening in the real world ........ and its possible effect on us , ..the following that is happening may affect the financial health of the banking systems in the US (but like the proverbial frog in the well, all is still blue skies to you). They are now talking of SOLVENCY, not just LIQUIDITY issue .......it's really quite serious now. This is not meant to frighten but be a voice of caution ........ so as to mitigate potential losses! SOLVENCY WORRIES STALK CREDIT-DERIVATIVES MARKET Gross applied the historical average default rate of 1.25 percent to the $45.5 trillion of notional swaps and assumed a 50 percent recovery
Standard Chartered Bank is bulking up its in-house derivatives expertise across the globe.The bank snared derivatives associate Belle Chan-Moffat from Stephenson Harwood for its London team at a time when most banks are cutting staff rather than recruiting.A source close to the bank said: "There's been significant growth in the commodity derivatives market, particularly in the emerging markets. Because the bank is prominent in various emerging markets, including the Middle East and Asia, it's become a big part of the business."During the next year the bank plans to recruit derivatives lawyers in Dubai, New York and Singapore.Earlier this year (1 October), The Lawyer reported on the dearth of derivatives lawyers in the legal market.The source said: "Good derivatives lawyers are few and far
2008 outlook: Housing by Money Magazine - 11/6/07 snips:Although home prices nationwide are down 4.2 percent from a year ago, "the worst is yet to come," says Joshua Shapiro, chief U.S. economist at consulting firm Maria Fiorini Ramirez. Just how bad will it get? According to Fiserv Lending Solutions, the median home price nationwide is expected to tumble 5.7 percent next year, which would make it the worst year for real estate in at least 40 years... The problem stems from that classic economic conundrum: too much supply and too little demand. As of September, some 4 million existing homes were languishing on the market - almost double the number three years ago - in addition to 523,000 new homes. Homes in foreclosure, projected to jump 25 percent next year to 1 million, further add to the backlog. Lenders, meanwhile, have dramatically tightened their borrowing requirements as defaults have risen, shrinking the pool of qualified buyers. If you were hoping to sell a home anytime so
It appears as if the US Treasury expects a fallout in the derivatives market. Anthony Ryan, the Treasury's assistant secretary for financial markets, said on Wednesday that investors and their fiduciaries must do a better job of evaluating the risks of increasingly complex securitized derivatives products, Reuters reported.Addressing an International Swaps and Derivatives Association (ISDA) conference in New York Ryan reminded his audience on the differences between investing and gambling.Insufficient understanding or failure to perform an independent and adequate due diligence prior to making an investment decision is simply unacceptable. That's not investing - that's gambling.In clear language I assume it means something along the lines of "it is your fault when you bought illiquid crap."According to Ryan the Presidents Working Group on Financial Markets, also dubbed the "Plunge Protection Team," has launched an examination of recent market turmoil, including the impact of securit
Hat tip to commenter Rohit for bringing a great MSN Money article to my attention and its exploration of the heart of the matter for volatile markets: an flight away from highly leverage derivatives.The article makes a minor error at the start by wondering if we're headed for an "epic bear market". While we should be concerned about a bear market outlook, the article's real umph comes from the source it uses and a pretty complete exploration of over-the-counter derivatives market. Any how, derivatives unwinding will impact far more than the stock stock market.So look beyond the bear stock market theme at the start of the article and concentrate on the derivatives aspect of the piece.To read more click here.I'd also suggest reading the "talk back" section of the article where readers get to comment. Most have no idea of big this problem is. One commenter thought a $300 bln S&L style bailout would solve the problem. The article didn't disclose that the notional value of the deriv
Book Description
ISBN-007134506XToday's executives and managers need derivatives to safeguard their companies from undue financial risk--but too many don't understand the rules! Derivatives provides easy-to-understand explanations on how these essential tools operate, and how executives unfamiliar with their dangers can cost their companies millions or even billions of dollars. From simple
Author: Robert W. Kolb, James A. OverdahlPaperback: 288 pagesPublisher: Wiley; 3 edition (October 11, 2002)Language: EnglishISBN: 0471232327Understand derivatives in a nonmathematical wayFinancial Derivatives, Third Edition gives readers a broad working knowledge of derivatives. For individuals who want to understand derivatives without getting bogged down in the mathematics surrounding their pricing and valuation Financial Derivatives, Third Edition is the perfect read. This comprehensive resource provides a thorough introduction to financial derivatives and their importance to risk management in a corporate setting. Zip Password: T0sT@rN@
Book Description
ISBN-0854045368
hydrogen peroxide and its derivatives can not only be employed for their
traditional bleaching applications or for the manufacture of pharmaceutical and fine chemicals, but also have uses in a diverse array of industries. Precious metal extraction from the associated ores, treatment of effluent, delicing of farmed salmon, and pulp and paper bleaching are but a few
I have been writing about bubbles enough to make the world sound like a geothermal hot-pool in Yellowstone National Park. I mostly talk about the global stock market bubble, asset price bubbles, and the credit bubble. Today, I want to write about investment banking and something that Warren Buffet once called “financial weapons of mass [...]
"By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it - a process that has undoubtedly improved national productivity growth and standards of living." -Alan GreenspanFinancial derivatives are financial instruments that "derive" value from an underlying item such as an asset or index. The use of derivatives provides exposure to the linked underlying item without necessitating the trade or exchange of the item itself. This allows specific risks, such as commodity or equity price fluctuations, to be traded in financial markets. Derivatives may be traded on exchanges such as the New York Stock Exchange(NYSE) and Chicago Mercantile Exchange(CME). Every derivative has unique features and provisions, and each derivative is used for a special financial purpose.Derivative Uses
"By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it - a process that has undoubtedly improved national productivity growth and standards of living." -Alan GreenspanFinancial derivatives are financial instruments that "derive" value from an underlying item such as an asset or index. The use of derivatives provides exposure to the linked underlying item without necessitating the trade or exchange of the item itself. This allows specific risks, such as commodity or equity price fluctuations, to be traded in financial markets. Derivatives may be traded on exchanges such as the New York Stock Exchange(NYSE) and Chicago Mercantile Exchange(CME). Every derivative has unique features and provisions, and each derivative is used for a special financial purpose.Derivative Uses
"By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives. These instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it - a process that has undoubtedly improved national productivity growth and standards of living." -Alan GreenspanFinancial
Just saw a terrific position up in the city testing derivatives. Can’t think of anything better, testing one-on-one with the developer and user really complex processing. Real agile stuff. They even want SQL, Test Director and Unix, which is perfect for me.
No point in phoning up about it as there will be a little guy, who may be very young, who knows absolute squat about IT development guarding the phone and deciding who to put forward, the agent. And there’s as much chance of him putting me forward as a one-armed blind man in a dark room trying to shove a pound of melted butter into a wild cat’s left ear with a red-hot needle.
Microsoft has confirmed that in Windows Server 2008 beta 3 that it will begin building Windows Server components the UNIX way: Command line first, with GUI tools built on top of the command line stuff. Erm…haven’t we been here before?
There is a breed of tester that shies away from problems, an attitude that doesn’t soun
Just saw a terrific position up in the city testing derivatives. Can’t think of anything better, testing one-on-one with the developer and user really complex processing. Real agile stuff. They even want SQL, Test Director and Unix, which is perfect for me.
No point in phoning up about it as there will be a little guy, who may be very young, who knows absolute squat about IT development guarding the phone and deciding who to put forward, the agent. And there’s as much chance of him putting me forward as a one-armed blind man in a dark room trying to shove a pound of melted butter into a wild cat’s left ear with a red-hot needle.
Microsoft has confirmed that in Windows Server 2008 beta 3 that it will begin building Windows Server components the UNIX way: Command line first, with GUI tools built on top of the command line stuff. Erm…haven’t we been here before?
There is a breed of tester that shies away from problems, an attitude that doesn’t soun
Just saw a terrific position up in the city testing derivatives. Can’t think of anything better, testing one-on-one with the developer and user really complex processing. Real agile stuff. They even want SQL, Test Director and Unix, which is perfect for me.
No point in phoning up about it as there will be a little guy, who may be very young, who knows absolute squat about IT development guarding the phone and deciding who to put forward, the agent. And there’s as much chance of him putting me forward as a one-armed blind man in a dark room trying to shove a pound of melted butter into a wild cat’s left ear with a red-hot needle.
Microsoft has confirmed that in Windows Server 2008 beta 3 that it will begin building Windows Server components the UNIX way: Command line first, with GUI tools built on top of the command line stuff. Erm…haven’t we been here before?
There is a breed of tester that shies away from problems, an attitude that doesn’t soun
Just saw a terrific position up in the city testing derivatives. Can’t think of anything better, testing one-on-one with the developer and user really complex processing. Real agile stuff. They even want SQL, Test Director and Unix, which is perfect for me.
No point in phoning up about it as there will be a little guy, who may be very young, who knows absolute squat about IT development guarding the phone and deciding who to put forward, the agent. And there’s as much chance of him putting me forward as a one-armed blind man in a dark room trying to shove a pound of melted butter into a wild cat’s left ear with a red-hot needle.
Microsoft has confirmed that in Windows Server 2008 beta 3 that it will begin building Windows Server components the UNIX way: Command line first, with GUI tools built on top of the command line stuff. Erm…haven’t we been here before?
There is a breed of tester that shies away from problems, an attitude that doesn’t sou
Okay, so we've all heard of LSD, right? Acid trips, Timothy Leary, "Tomorrow Never Knows", dirty hippies, "I am a golden god", etc. Fact is, LSD is but one of an impressively large number of derivatives of a compound called ergoline. These derivatives can be found in ergot (parasitic fungus that grows on grains and grasses), Hawaiian baby woodrose (climbing vine native to the Indian subcontinent but apparently also grown in Hawaii), and several species of morning glory (flowing plant that blooms in the morning). In addition to their use/abuse as psychedelic drugs, many natural and synthetic derivatives of ergoline have more legitimate applications:ergonovine and methylergonovine (Methergine, Methylergometrine) - directly stimulate contractions of uterine smooth muscle (oxytocic) - have historically been used to induce labour, but are now only used to prevent and treat postpartum and postabortion hemorrhage (uncontrolled bleeding occurring after birth or abortion) - contraction of the
By Yaser Anwar, CSC of Equity Investment Ideas
Traders of mortgage-backed securities (MBS) and the derivatives on which they are based predict that the current housing slump is about to get a lot worse, reports Bloomberg.
The ABX index, which measures the risk of mortgage-backed securities, rose 30% since August 9, says Bloomberg. That's its highest level since January.
The ABX index tracks the cost of so-called credit-default swaps, which are instruments that are used as insurance by traders in the event of a default. An increase in the cost of a credit-default swap indicates that the risk that underlying loans in the MBS and their derivatives will default is rising.
The index, which was created by London-based Markit Group Ltd., tracks 20 asset-backed securities with ratings of BBB-, the lowest level of investment-grade debt. Based on the index, the cost of insuring against a default rose to $267,000 to protect $10 million of bonds against default for a five-year term from $205,
Pip's Comment: Burn this headline into your brain.
Total Notional Value Of Derivatives
Outstanding Surpasses
One Quadrillion
By Jim Sinclair
6-10-8 The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION. This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since t
