PT  - JOURNAL ARTICLE
AU  - Alan White
TI  - Is the Derivatives Business Too Big?
AID  - 10.3905/jod.2012.20.1.011
DP  - 2012 Aug 31
TA  - The Journal of Derivatives
PG  - 11--13
VI  - 20
IP  - 1
4099  - https://pm-research.com/content/20/1/11.short
4100  - https://pm-research.com/content/20/1/11.full
AB  - While acknowledging the theoretical and practical importance of derivatives pricing models, White is puzzled by the tremendous amount of trading, especially within the financial sector (rather than between financial intermediaries and end-users) in zero-sum instruments that are supposed to be redundant. One possible explanation is that because risk exposure and the “fair” return on a derivative are conceptually hard to pin down, many derivatives investors may not be assessing risk exposures correctly. If so, better risk measures should lead to less trading in derivatives markets.TOPICS: Derivatives, VAR and use of alternative risk measures of trading risk, exchanges/markets/clearinghouses