A Legislation on Derivative Products: The Chicago Board of Trade

2167 Words 9 Pages
1. SUMMARY:
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Derivatives are able to eliminate unexpected risks arising from the price volatility of an asset, however they have often been implicated in the most controversial organisational meltdowns and financial crises. The evolution underlying assets in derivative products have pushed the development of legislation to support these changes. The Chicago Board of Trade was the first centralised derivative trading market, since then the United States regulation on derivatives have served as a basis from other countries when regulating their markets. The research wants to evaluate the impact that the changes in the underlying instrument had on regulation. A historiography as a research methodology is proposed, were a historiographical
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1. SUMMARY:
.
Derivatives are able to eliminate unexpected risks arising from the price volatility of an asset, however they have often been implicated in the most controversial organisational meltdowns and financial crises. The evolution underlying assets in derivative products have pushed the development of legislation to support these changes. The Chicago Board of Trade was the first centralised derivative trading market, since then the United States regulation on derivatives have served as a basis from other countries when regulating their markets. The research wants to evaluate the impact that the changes in the underlying instrument had on regulation. A historiography as a research methodology is proposed, were a historiographical essay study will be conducted with historian research and literature, and will be reviewed by comparing and contrasting the theory. By means of inductive reasoning we are able to identify historical debates between historians, identify historical questions in the area of research that still need to be investigated and finally answer the research questions and fulfill the research objectives in our proposed study.

Key words: Derivatives, Underlying Assets, Legislation

2. Introduction
Derivatives were initially developed to secure the supply of commodities and facilitate trade as well as to insure security from crop failures, But along the years derivatives started to serve in addition other purposes such as quick profit
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