Justin Sliney — A Brief Description of Derivatives on Wordpress.com

Derivatives are dependent upon underlying assets and play an important role in finance. Justin Sliney is a skilled banker with nearly two decades of experience. He worked for Rabobank International for 17 years, and during that time he often worked with his bank’s derivatives trading book in the United States. Many large banks deal with and trade derivatives.

While many people in the financial services sector deal with derivatives, they remain mysterious to many non-bankers. A simplified definition is that derivatives are securities that have a price that is dependent on a single, or multiple, underlying assets. The value of a derivative is generally determined by fluctuations in value of some underlying asset. Derivatives are essentially contracts between multiple parties, and those contracts are based on assets. Common underlying assets are market indexes, interest rates, currencies, bonds, commodities, and stocks.

Derivatives were originally used on the international trade market to ensure balanced exchange rates. As the international and national markets evolved, derivatives took on several more uses. Because the contracts are so flexible, they can be used for many different purposes, but the primary reason for their use is to hedge or mitigate risks.

Common forms of derivatives include futures contracts, forward contracts, and swaps, but there are numerous other types of derivatives contracts routinely traded among multiple parties around the globe.

Justin Sliney spent a lot of his career working with his bank’s derivatives trading book and is highly knowledgeable about the different types of derivatives and their uses.

Published by: Gary S