Global derivative markets have exhibited spectacular growth in terms of volume of trading and use by both financial and non-financial institutions.  Some of the world's large institutions-Orange County, Baring, Metallgesellschaft, Negara, AIG, and Lehman Brothers have lost billions of dollars in the financial markets.  Whilst national and international authorities have agonised over the regulation of derivative markets, it generated tremendous interest on the nature, operation, working mechanism and true significance of derivative products and markets in the financial system and the economy.

The module focuses on the principle and characteristics of the main derivative markets, products and instruments, such as Futures, Forward, Options, Swaps, Credit Default Products and Structured Products.  It examines the role, significance and working mechanism of various derivatives products, their valuation method and the models underpinning the pricing and hedging of derivative instruments.  The module will draw from the rapidly expanding body of academic and professional literature relating to derivatives and their applications in Financial Markets.