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Derivatives

Financial contracts whose value derives from an underlying asset, rate or index, such as swaps, futures, forwards and options.

A derivative's value comes from something else: an interest rate, an exchange rate, a commodity or an equity. They are used to hedge risk, to gain exposure efficiently or to speculate.

Common types include forwards, futures, swaps and options. They bring counterparty credit risk, which is why collateral and central clearing matter.

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