What is derivatives securities (DS)

DS is a type of financial instrument that is valued based on the value of one or more underlying assets. DS is reflected in many types of contractual arrangements, which stipulate the rights and obligations of the parties to the payment in cash, the transfer of underlying assets at a pre-agreed price at a certain point of time in the future.

The underlying assets of DS are divided into 02 types:

  • Non-financial assets: food (cereals, meat, coffee, pepper, etc.), metals (gold, silver, zinc, etc.), energy (gas, oil,…), others (weather, election results, etc...)
  • Financial assets: stocks (stock indices, single stocks), bonds (government bonds, local bonds, corporate bonds, bond indices), interest rates (interbank rates, foreign exchange rates), exchange rates (exchange rates against strong currencies such as the USD, JPY, EUR, ...), and even on Derivatives (high rate DS, valuation based on basic DS contracts)