Evolution Of Credit Derivatives: An Overview

Premchandra M. Dahake, Maharashtra National Law University, Nagpur

Page: 28-36

ABSTRACT

Every lock has a key just like every risk having a solution. This solution can be figured out with time as the changes that happen along with it will find a way to solve the issues based on the circumstances. Credit derivatives are all about risk management if it has to be described in a nutshell. It is a mechanism for dealing with the risks in the process of trade in the derivatives market where the transactions and agreements have to be managed appropriately. The parties involved in the process have to act according to the contract made for the trade and the transactions have to be done without fail. In this research, the researcher has focused on the concept of derivatives in general dealing with credit derivatives specifically. The changing legal aspects are discussed in the study along with the risks that can arise in such trade-related aspects. A detailed analysis is done on the reforms that have happened since the credit crisis in 2008 with a comparative study on the pre-crisis period. The need to have a properly functioning economy can be seen based on the activities done in the finance world.

Keywords: Credit Derivative, Management, Pre-crisis period, Economy, Finance.