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Bourse

Expertise in Derivatives

Specialty: OIS Finance

Derivative financial products (or simply derivatives) are financial instruments whose value depends (“derives”) from that of another asset called the underlying asset.

These underlying assets can be:

  • shares,

  • obligations,

  • stock market indices,

  • interest rates,

  • foreign currencies,

  • or even raw materials (oil, gold, wheat, etc.).

🔹 Main objective

Derivatives are used to:

  1. Hedging : reducing or eliminating a financial risk (e.g., exchange rate risk, interest rate risk, price risk).

  2. Speculate : to bet on the future price movement of an asset in order to make a profit.

  3. Arbitrage : taking advantage of price differences between markets or similar products.

🔹 The main types of derivative products

OIS Finance

Swaps

Exchanges of future financial flows (often interest rates or currencies).

Exemple:

Two companies are swapping fixed rates for variable rates to optimize their financing.

OIS Finance

Futures

Standardized futures contracts, traded on an organized market (exchange).

Exemple:

An investor buys an oil futures contract to profit from a price increase.

OIS Finance

Options

The right (and not the obligation) to buy (call) or sell (put) an asset at a given price before or at the expiry date.

Exemple:

A company buys a put option on wheat to protect itself against a price drop.

OIS Finance

Futures contract

An agreement between two parties to buy or sell an asset at a price fixed today, on a specified future date.

Exemple:

An exporter fixes the future EUR/USD exchange rate to protect against a depreciation of the dollar.

🔹 Derivatives Markets

  • Organised markets : standardised products, subject to strict rules (e.g. Euronext, CME).

  • Over-the-counter (OTC) markets : customized contracts directly between financial institutions (more flexibility, but more counterparty risk).

🔹 Associated risks

  • Market risk : adverse variation in the price of the underlying asset.

  • Counterparty risk : the other party does not honor its commitments.

  • Liquidity risk : difficulty in reselling or unwinding a position.

  • Operational risk : human, technical or legal errors.

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