The global impact of derivatives: Why trade reporting matters more than ever

Derivatives are among the most widely used financial instruments in the world today. They are integral to the global financial system, serving as essential tools for risk management, speculation, and investment strategies and supporting everything from corporate balance sheets to pension fund stability.

Derivatives are embedded in the financial infrastructure and used by banks, asset managers, hedge funds, super funds, insurers and many other non-financial firms. Underlying assets such as stocks, bonds, commodities, or interest rates are how derivatives get their value.

As financial instruments, derivatives can be used to establish stability on variable assets by locking in financing, reducing costs, and protecting against losses. They are used daily in activities ranging from hedging currency exposure to managing interest rate risk and securing commodity prices.