Exchange Traded Derivative Products
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This paper will accept the challenge of creating new exchange-traded derivative products that would be a valuable addition to an established electronic stock exchange. The derivative created for this assignment would be an asset-based mortgage bundling investment trust that would deal with new construction in Asian nations. Since this derivative, and any new or existing derivative, would be traded on any exchange would have to meet stringent requirements, it is essential in the first part of this paper to discuss the two concepts of "electronic stock exchange" and "derivatives." The existing literature on both of these topics can be misleading inasmuch as there usually appears some murkiness in the precise definitions of what each of these concepts are. Part One, Derivatives will deal with the concept of derivatives, including their invention, uses, and, most importantly, the restrictions placed on derivative investments. Part Two, Stock Exchange Concept, sketches the general concept of a stock exchange, since the primary elements are required, whether the exchange is "land-based" or "electronic. Part Three will introduce the concept of the asset-based mortgage bundling investment trust. Part Four will then attempt to see how rationally this derivative fits within the parameters of an electronic stock exchange.Part One: The Concept of a Derivative Philosophically, and sometimes in practice, a financial derivative is really nothing more than a financial instrument
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nd, of course, the fact that no one can predict the future. In the next section we will examine a financial model that exists on the concept of the future -- the electronic stock exchange.
Part Two: The Concept of a Stock Exchange
Practically all of the some 300 major stock exchanges in the world function with the same basic business model: companies that wish to sell shares of their stock or investors who wish to buy stock, can buy and sell through brokers. These brokers are thoroughly licensed and investigated, and follow stringent regulations established by the nation's government. Some of the stock exchanges in the world -- the London Stock Exchange, the Hong Kong Stock Exchange and the Prague Stock Exchange operate basically like the New York Stock Exchange. All sales and buys are only made on the floor by registered brokers who represent both individual investors and companies.
Although computers are used, and the stock exchanges are, to an extent, electronically linked, these four stock exchanges remain somewhat old-fashioned in that buyers and sellers (representing investors all over the globe) shout orders at one another face to face.
In fact, the NYSE's " and the London "auction"" system (buyers and sellers me
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Some common words found in the essay are:
Assume Company, Banker's Trust, , NYSE's London, Adler Prasad, United Congress, Derivative Philosophically, Exchange Practically, Stock Exchange, Bank Companies, stock exchange, stock exchanges, electronic stock, electronic stock exchange, financial loss resulting, possibility financial, loomis 1995, financial loss, loss resulting, exposure possibility, possibility financial loss, exposure possibility financial, investment trust, financial derivatives, mortgage bundling investment,
Approximate Word count = 2313
Approximate Pages = 9 (250 words per page)
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