The concept of a derivative product, with a value that depends on at least one risk factor, has been the greatest financial-product innovation of the 20th century.

ECONOMIST: Letters

The company sold a combined equity, bond and derivative product and backed up the conversion feature with a pledge of shares by the insiders, then handed the proceeds of the offering to the same insiders.

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Perhaps it is because the average investor has more experience trading stocks or because options are a derivative product, but the worry about who you are trading with becomes even more pronounced here.

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Most of the major banks have significant structured product and derivative desks too.

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There are also those in the wings with another product to flog: a foreign-exchange derivative which, because it is a bet settled for cash, also reduces Herstatt risk.

ECONOMIST: Foreign exchange