A Thumbnail Sketch of Derivative Securities and Their Regulation

Abstract

Derivative securities-financial instruments whose value derives from some other, more fundamental, asset-have gone from obscurity and the arcane to the front pages of newspapers and the forefront of the legislative agenda in a very short time span. This change has occurred because a diverse set of investors, from hedge funds, corporations, and money market mutual funds to non-profit organizations, have posted large losses on derivative investments.