Abstract
AbstractIn July 1993, the Global Derivatives Study Group of the Group of Thirty published Derivatives: Practices and Principles. The study explains derivatives and their uses and makes recommendations about the management of a derivatives portfolio. The study also defines a set of recommended risk management practices for dealers and end‐users, based on the best current practice.A broad conclusion of the study is that derivatives do not introduce risks that are fundamentally different from the risks that already are present in the financial markets. Therefore, the risks can be addressed within the present regulatory framework. Some areas of concern are in clarifying legal uncertainties and resolving legal inconsistencies among countries. The study also makes recommendations to accounting standards setters and tax authorities but does not attempt to define appropriate levels of regulatory capital for financial institutions.
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