Etd – Trend Trading And Norms
Exchange-traded derivatives (ETDs) are derivative products traded through specialized derivates exchanges or other similar exchanges. The derivates exchange acts as a go-between for all related transactions, taking initial margin from each side of the exchange to act as a guarantee.
Some of the world’s largest derivatives exchanges are:
• Korea Exchange – The Korea Exchange lists the KOSPI (Korea Composite Stock Price Index) Index Futures & Options. It was created out of three existing Korean spot and futures exchanges that were brought together under the Korea Stock & Futures Exchange Act. The exchange had a combined market capitalization of $1.1 trillion as of 31 December 2007.
• Eurex – The Eurex lists a wide range of European products including interest rate and index products. It is a major futures and options exchange catering for European benchmark derivates that features low-cost electronic access globally. It is considered one of the Big Three derivative exchanges, along with Chicago Mercantile Exchange and NYSE Euronext Life.
• CME Group – The CME Group Incorporated is the world’s largest futures exchange. It’s made up of a merger of the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange. The merger occurred in 2007 with the acquisition of the New York Mercantile Exchange taking place in 2008.
The combined turnover of the global derivatives exchanges have been reported to total up to US $344 trillion during the fourth quarter of 2005.
Certain types of derivative instruments have also been found to trade on traditional exchanges, for example hybrid instruments such as convertible preferred and/or convertible bonds could also be listed on bond or stock exchanges. Other instruments such as warrants or rights could also be found listed on equity exchanges. Various instruments that include cash experts and Performance Rights and that consist of complex options sets bundled together into simple packages are often regularly listed on equity exchanges. Publicly traded derivatives offer investors access to risk and reward and volatility characteristics that are distinctive, although they are related to an underlying commodity. This is fairly similar to other derivatives.
Contrary to exchange-traded derivatives, there are over-the-counter (OTC) derivatives that are privately negotiated and traded directly between two parties without being traded through an exchange or passing through any other intermediary. Forward rate agreements, exotic options, swaps and similar products are always traded in this manner. This is the norm or trend within the market.
Danny is the founder of Top ETF Review, where you can find the latest on ETF trading, if you dont really know what ETF (Exchange Traded Funds) is Danny also has a informative Squidoo lens called: How to Trade ETF.
Article Source: ArticlesBase.com - Etd – Trend Trading And Norms