Financial Derivatives - Inherent Risks & Challenges for an Emerging Economy

With competition heating up for cash inflows globally, it has become imperative to have a liberalized market for more efficient allocation of capital. The strengthening indication of the domestic financial market implies that the domestic markets have opened up for competition and efficiency.For nearly a decade now, derivative products have created a new synergy in the financial markets and about four years ago we saw a revolution, which has now opened up the commodity markets to derivatives trading. Derivatives have been instrumental in managing risk across the world. When used properly they have been found to enhance shareholders' wealth. When used with a lost objective, they have resulted in some of the biggest financial fiascos ever known to mankind