DIALECTICS OF THE ECONOMIC ESSENCE OF DERIVATIVES

Abstract

The economic essence of derivatives has been clarified for the correct classification of their types, determination of components and mechanism of action of the derivatives market, development of basic concepts of derivatives pricing by the realities of the Ukrainian economy. The views of the leading scientists of the world on derivatives determination are investigated. The incorrectness of the term urgent derivatives concept has been proved since the economic nature of derivatives already implies urgency. The objection to the definition of a derivative as a “standard-form financial instrument belonging to the category of “derivative securities” (or second-tier securities) confirming the right or obligation of its owner to buy or sell securities, currency, commodities or intangible assets is justified, on predefined terms, in the future”. It is determined, first, that derivatives may have a non-standard form, in particular over-the-counter (OTC) derivatives; secondly, they do not belong to derivatives, since the latter are lower-tier counterfeit titles compared to derivatives; third, it is unclear what is the meaning of the category “second-tier securities”, since it is not specified what is the second-tier. It is proved that the definition of derivatives due to the peculiarities of their market mechanism, pricing, structural elements is not fully determined since the features should be substantive, and not vice versa – to determine the object. The results of the study of the dialectics of the economic nature of derivatives have shown that the terms “derivative”, “fixed-term financial instrument”, “derivative securities”, “fixed-term contract” are used as synonyms. It is substantiated that the use of different definitions leads to contradictions of general economic, legal and organizational nature, which slows down and distorts the development of the derivatives market of Ukraine. The conciseness and content of the definition of the following types of derivatives are substantiated: forward contracts, futures contracts, options contracts, contract swaps. It is proposed to identify the main types of “financial derivatives”. The feasibility of considering derivatives in two aspects has been proved. In the narrow sense, these are fixed-term contracts (forwards, futures, options, and swaps) and the specific terms of their conclusion and performance. In a broad sense, derivatives cover all types of fixed-term contracts, secondary securities, as well as products of modern financial engineering technologies, including structured, hybrid, synthetic financial instruments. Key words: derivative, fixed-term contract, security, financial instrument.