Derivatives: The Key Principles, 3rd Edition

• Comprehensive, clear and accessible guide to the complex subject of derivatives
• Provides a centre-ground between pure economics and pure law
• Top down approach provides a practical explanation of derivatives from both perspectives; derivatives as a cash flow and derivatives as a contract

New to this edition

• Discussion of a greater number of derivative products (including CPPI structures, derivatives used as financing tools, power trading, emissions trading, multi-asset derivatives, fund-linked derivatives, derivatives based on "computed data", and the different "wrappers" in which derivative exposures are made available).
• Greatly expanded discussion of the ISDA documents used in the over-the-counter (OTC) market.
• Extended discussion of the duty of care (selling and misselling, including the recent decision in the "Springwell" litigation).
• Includes coverage of derivatives in the retail market for the first time.
• Updated material on legislative and regulatory developments, including the inception of MiFiD, capital adequacy and the tax treatment of derivatives.
• Updated material on capital adequacy regulation and the tax treatment of derivatives

This book is a practical guide to derivatives, setting out a straightforward and easily understood explanation of the basic concepts, the different types of derivative product, who uses derivatives, and why and how derivatives are used. The book explains both more established products (such as futures, options, and swaps) and more innovative products (such as CPPI structures and those derivative contracts used as financing tools). The expansion of the derivative market to cover different underlying assets (such as freight, power trading, emissions trading, and hedge funds) is explored.

The author provides guidance as to the legal and regulatory treatment of derivatives. The book looks at the key documents that are used in both the exchange-based and over-the-counter (OTC) markets and explores the important materials published by ISDA .The book also discusses other related topics including the accounting and tax treatments of derivatives.

The book considers the background to current legal trends, including the developing strand of English case law on claims for the misselling of derivative products and the retail offer of derivatives, which has recently been the subject of considerable debate within the financial services industry.

The third edition includes a new discussion of the retail offer of derivatives, and discusses a greater number of derivative products (including CPPI structures, derivatives used as financing tools, power trading, emissions trading, multi-asset derivatives, fund-linked derivatives, derivatives based on "computed data", and the different wrappers" in which derivative exposures are made available).

It provides greatly expanded discussion of the ISDA documents used in the over-the-counter (OTC) market and looks in more detail at the duty of care (selling and misselling, including the recent decision in the "Springwell" litigation).

Readership: Finance practitioners and professionals active in the derivatives markets; legal and regulatory professionals; students studying financial law.