Introduction:
Metal recycling plays a crucial role in the sustainable management of resources and the reduction of environmental impact. Metals are valuable materials that can be reused indefinitely, making recycling an effective way to conserve energy, reduce greenhouse gas emissions, and minimize the need for destructive mining practices. This guide aims to provide a comprehensive overview of metal recycling, including its importance, the recycling process, common metals recycled, and the benefits of metal recycling.

The Importance of Metal Recycling:
Metal recycling is vital for several reasons. Firstly, it helps conserve natural resources. Metals such as aluminum, copper, and steel are finite resources, and extracting them from the earth's crust requires significant energy and has a detrimental impact on the environment. By recycling metals, we can reduce the need for extraction and preserve these resources for future generations.
Secondly, metal recycling reduces energy consumption. The energy required to produce new metals from raw materials is considerably higher compared to the energy needed for recycling. Recycling metal not only saves energy but also reduces greenhouse gas emissions associated with the mining, transportation, and processing of ores.

The Metal Recycling Process:
The metal recycling process typically involves several stages:
a) Collection: Metal scrap is collected from various sources, including industrial waste, consumer goods, and discarded appliances. Collection methods can range from curbside pickup to dedicated recycling centers.

b) Sorting: After collection, the metal scrap is sorted into different categories based on metal type, such as aluminum, steel, copper, brass, etc. Sorting is crucial to ensure efficient recycling and prevent contamination.

c) Shredding and Crushing: Once sorted, the scrap metal is shredded or crushed into smaller pieces. This process increases the surface area, making it easier to separate impurities and prepare the metal for melting.

d) Melting and Purification: The shredded metal is then melted in a furnace at high temperatures. During the melting process, impurities are removed, and the molten metal is purified. The purified metal is formed into ingots or other shapes for further Tool Steel Scrap Buyer processing.

e) Forming and Fabrication: The recycled metal can be used to manufacture new products or components. It can undergo processes such as rolling, forging, casting, or extrusion to create different shapes and sizes according to specific requirements.

Commonly Recycled Metals:
Various metals are commonly recycled due to their high demand and recyclability. The most frequently recycled metals include:
a) Aluminum: Aluminum recycling is prevalent due to its lightweight, corrosion resistance, and widespread use in packaging (e.g., cans) and transportation industries. Recycled aluminum requires only a fraction of the energy used in primary production, making it highly cost-effective.

b) Steel: Steel is the most recycled material globally. It is used in construction, appliances, and automotive industries due to its strength and durability. Recycling steel saves significant amounts of energy and reduces the need for iron ore extraction.

c) Copper: Copper is a highly valued metal due to its excellent electrical conductivity and corrosion resistance. It is extensively used in electrical wiring, plumbing, and electronics. Recycling copper helps conserve natural resources and reduces environmental impact.

d) Brass: Brass, an alloy of copper and zinc, is widely used in plumbing fixtures, musical instruments, and decorative items. Recycling brass reduces the need for mining both copper and zinc ores, leading to energy savings and reduced greenhouse gas emissions.

Benefits of Metal Recycling:
Metal recycling offers numerous environmental, economic, and social benefits:
a) Resource Conservation: Recycling metals conserves natural resources, reduces the demand for primary extraction, and helps preserve the environment.

b) Energy Savings: Recycling metals consumes significantly less energy compared to primary production, resulting in reduced greenhouse gas emissions and fossil fuel consumption.

c) Waste Reduction: By recycling metal scrap, we divert waste from landfills and promote a circular economy where materials are reused rather than disposed of.

d) Job Creation: Metal recycling contributes to employment opportunities in collection, sorting, processing, and manufacturing industries.

e) Economic Growth: Metal recycling is an integral part of the scrap metal industry, which generates billions of dollars in economic activity globally.

Conclusion:
Metal recycling is a critical component of sustainable waste management and resource conservation. By understanding the importance of metal recycling, the recycling process, and the common metals that can be recycled, individuals and businesses can actively participate in reducing their environmental footprint. Embracing metal recycling not only conserves resources and saves energy but also contributes to a cleaner, greener, and more sustainable future for generations to come.

Vape pens have gained immense popularity in recent years as a portable and discreet way to consume various substances, such as nicotine or cannabis. These compact devices offer a convenient alternative to traditional smoking methods, delivering a smooth and flavorful vapor. Whether you're a beginner or an experienced vaper, this guide aims to provide you with a comprehensive overview of vape pens, including their components, usage, maintenance, and safety considerations.

Understanding Vape Pens

Vape pens consist of several essential components that work together to produce vapor. The key elements include:

Battery: The battery is the power source for the vape pen. It provides the energy needed to heat the coil and vaporize the e-liquid.

Atomizer: The atomizer houses the coil, which is responsible for heating the e-liquid. It also contains a wick that absorbs the liquid and delivers it to the coil.

Tank or Cartridge: The tank or cartridge holds the e-liquid or concentrate that is vaporized. It typically features a mouthpiece for inhalation.

Types of Vape Pens

Vape pens come in various types, each designed for specific purposes. Here are the most common types:

E-Liquid Vape Pens: These vape pens are designed for vaping e-liquids containing nicotine or flavorings. They usually have refillable tanks or disposable cartridges.

Dry Herb Vape Pens: Dry herb vape pens are designed for vaporizing dried herbs, such as cannabis or tobacco. They feature a chamber for loading the herb, which is then heated to produce vapor.

Concentrate Vape Pens: Concentrate vape pens are used for vaporizing cannabis concentrates, such as wax or shatter. They typically have special atomizers designed to handle thicker substances.

Using a Vape Pen

Using a vape pen correctly ensures optimal performance and enhances your vaping experience. Here's a step-by-step guide:

Charging the Battery: Before using a new vape pen, make sure to charge the battery fully using the provided charger. Follow the manufacturer's instructions for the recommended charging time.

Filling the Tank or Cartridge: For e-liquid vape pens, unscrew the tank or cartridge from the battery. Fill the tank with your chosen e-liquid, being careful not to overfill it. Reattach the tank securely to the battery. For concentrate or dry herb vape pens, follow the manufacturer's instructions for loading the chamber.

Powering On: Most vape pens have a button or an automatic draw feature. To turn on the device, press the power button five times rapidly or simply take a draw if it has an automatic draw feature.

Adjusting Settings: Some vape pens allow you to adjust settings, such as wattage or temperature. Refer to the user manual to understand how to modify these settings based on your preferences.

Inhaling and Vaporizing: Place the mouthpiece to your lips and inhale slowly, allowing the coil to heat the e-liquid, herb, or concentrate. Start with short, gentle draws to test the vapor production and adjust your technique as needed.

Maintenance and Safety Considerations
To ensure the longevity and safety of your vape pen, it's important to follow proper maintenance and safety practices. Here are some essential tips:

Cleaning: Regularly clean your vape pen to remove residue and maintain optimal performance. Use a cotton swab or soft cloth to wipe the mouthpiece, tank, and atomizer. Avoid using water or cleaning agents on electronic components.

Storage: When not in use, store your vape pen in a cool and dry place, away from direct sunlight and extreme temperatures. This helps preserve the battery life and prevents damage to the device.

Battery Safety: Handle the battery with care and avoid exposing it to water or extreme temperatures. Use the charger provided by the manufacturer to prevent damage and ensure safe charging.

Proper Usage: Follow the manufacturer's instructions regarding recommended usage and avoid overusing or overheating the device. Regularly check for signs of wear and tear, such as frayed cables or damaged components, and replace them if necessary.

Liquid and Material Quality: Use high-quality e-liquids, herbs, or concentrates specifically designed for vape pens. Best online vape stores Low-quality substances can negatively affect the taste, performance, and safety of your device.

Conclusion:

Vape pens offer a convenient and enjoyable way to consume nicotine or other substances. By understanding the components, types, and proper usage of vape pens, as well as following maintenance and safety guidelines, you can ensure a satisfying and safe vaping experience. Remember to refer to the manufacturer's instructions and stay updated with the latest industry standards to make informed choices regarding your vape pen. Happy vaping!

The creative and cultural industries are dynamic sectors that encompass a wide range of disciplines, including visual arts, music, film, literature, fashion, design, and more. Research in these industries plays a crucial role in understanding their impact on society, identifying trends, and developing innovative approaches. This guide aims to provide a comprehensive overview of research in the creative and cultural industries, exploring various methodologies, tools, and strategies to conduct effective research in this field.

Understanding the Creative and Cultural Industries
Before diving into research methodologies, it is essential to have a clear understanding of the creative and cultural industries. This section will define these industries, highlight their significance, and discuss their economic and cultural impact on society. Additionally, it will provide an overview of the diverse sectors that fall under this umbrella term, including visual arts, performing arts, media, publishing, heritage, and more.

The Importance of Research in Creative and Cultural Industries
Research is vital for the growth and development of the creative and cultural industries. This section will explore the reasons why research is crucial in this field. It will discuss how research helps in identifying emerging trends, understanding audience preferences, assessing market demands, and fostering innovation. Furthermore, it will highlight the role of research in policy-making, strategic decision-making, and driving economic growth.

Research Methodologies in the Creative and Cultural Industries
This section will delve into various research methodologies that can be employed when studying the creative and cultural industries. It will cover both quantitative and qualitative research approaches, including surveys, interviews, case studies, ethnography, content analysis, and more. The section will provide detailed explanations of each methodology, highlighting their strengths, limitations, and suitable contexts for application.

Data Collection and Analysis
Collecting and analyzing data is a critical aspect of research in the creative and cultural industries. This section will discuss different methods of data collection, such as primary and secondary data sources, surveys, observation, and archival research. Additionally, it will explore strategies for data analysis, including qualitative coding, thematic analysis, statistical analysis, and visualization techniques. The section will also address ethical considerations in data collection and analysis.

Trends and Innovation in the Creative Creative Researchers London and Cultural Industries
Staying abreast of the latest trends and fostering innovation are key aspects of research in the creative and cultural industries. This section will explore how researchers can identify and analyze trends in different sectors. It will discuss the role of technology, social media, and consumer behavior in shaping trends. Furthermore, it will highlight the importance of innovation and how researchers can contribute to the development of new ideas, products, and services.

Collaborative Research and Partnerships
Collaboration and partnerships between researchers, industry professionals, and policymakers are essential for the advancement of the creative and cultural industries. This section will emphasize the benefits of collaborative research and provide insights into establishing and maintaining effective partnerships. It will explore interdisciplinary research approaches and highlight the significance of engaging with diverse stakeholders.

Disseminating Research Findings
Effective dissemination of research findings ensures that the knowledge generated contributes to the growth and development of the creative and cultural industries. This section will explore different avenues for disseminating research, including academic publications, conferences, exhibitions, reports, policy briefs, and digital platforms. It will also discuss the importance of engaging with practitioners, policymakers, and the general public to maximize the impact of research.

Conclusion
Research in the creative and cultural industries plays a pivotal role in understanding, analyzing, and advancing these sectors. This guide has provided a comprehensive overview of research in the creative and cultural industries, covering various aspects such as understanding the industries, the importance of research, research methodologies, data collection and analysis, trends and innovation, collaborative research and partnerships, and disseminating research findings.

A financial market refers to a marketplace where various kinds of financial securities such as stocks, bonds, commodities, etc. are traded. The term ‘market’ can also refer to exchanges that are legal organizations that facilitate the trade of financial securities between buyers and sellers. In any case, these markets are categorized based of the type of financial securities that are traded through them. One such financial market is the Derivatives Market.

Derivatives market thus refers to the financial marketplace where derivative instruments such as futures, forwards and options contracts are traded between counterparties.

It was during the 1980s and 1990s that the financial markets saw a major growth in the trade of derivatives. A derivative is a financial instrument whose value is derived from the value of an underlying asset such as stocks, bonds, currencies, commodities, interest rates and/or different market indices. These underlying assets have fluctuating prices and returns, and derivatives provides a means to investors to reduce the risk exposure and leverage profits on these assets. Thus, derivatives are an essential class of financial instruments and central to the modern financial markets providing not just economic benefits but also resilience against risks. The most common derivatives include futures, forwards, options and swap contracts.

As per the European Securities and Markets Authority (ESMA), derivatives market has grown impressively (around 24 percent per year in the last decade) into a truly global market with over €680 trillion of notional amount outstanding. The interest rate derivatives (IRDs) accounted for 82% of the total notional amount outstanding followed by currency derivatives at 11%.

Main types of derivative contracts
Derivatives derive their value from an underlying asset, or simply an ‘underlying’. There is a wide range of financial instruments that can be an underlying for a derivative such as equities or equity index, fixed-income instruments, foreign currencies, commodities, and even other securities. And thus, depending on the underlying, derivative contracts can derive their values from corresponding equity prices, interest rates, foreign exchange rates, prices of commodities and probable credit events. The most common types of derivative contracts are elucidated below:

Forwards and Futures
Forward and futures contracts share a similar feature: they are an agreement between two parties to buy or sell a specified quantity of an underlying asset at a specified price (or ‘exercise price’) on a predetermined date in the future (or ‘expiration date’). While forwards are customized contracts i.e., they can be tailor-made according to the asset being traded, expiry date and price, and traded Over-the-Counter (OTC), futures are standardized contracts traded on centralized exchanges. The party that buys the underlying is said to be taking a long position while the party that sells the asset takes a short position and both parties are obligated to fulfil their part of the contract.

Options
An option contract is a financial derivative that gives its holder the right (but not the obligation) to trade an underlying asset at a price set in advance irrespective of the market price at maturity. When an option is bought, its holder pays a fixed amount to the option writer as cost for this flexibility of trading that the option provides, known as the premium. Options can be of the types: call (right to buy) or put (right to sell).

Swaps
Swaps are agreements between two counterparties to exchange a series of cash payments for a stated period of time. The periodic payments charged can be based on fixed or floating interest rates, depending on contract terms decided by the counterparties. The calculation of these payments is based on an agreed-upon amount, called the notional principal amount (or just notional).

Exchange-traded vs Over-the-counter Derivatives Market
Exchange-traded derivatives markets
Exchange-traded derivatives markets are standardized markets for derivatives trading and follows rules set by the exchange. For instance, the exchange sets the expiry date of the derivatives, the lot-size, underlying securities on which derivatives can be created, settlement process etc. The exchange also performs the clearing and settlement of trades and provide credit guarantee by acting as a counterparty for every trade of derivatives. Thus, exchanges provide a transparent and systematic course of action for any derivatives trade.

Over-the-counter markets
Over-the-counter (also known as “OTC”) derivatives markets on the other hand, provide a lesser degree of regulations. They were almost entirely unregulated before the financial crisis of 2007-2008 (also a time when derivatives markets were criticized, and the blame was placed on Credit Default Swaps). OTCs are customized markets and run by dealers who hedge risks by indulging in derivatives trading.

Types of market participants
The participants in the derivative markets can be categorized into different groups namely,

Hedgers
Hedging is a risk-neutralizing strategy when an investor seeks to protect a current or anticipated position in the market by limiting their risk exposure. They can do so by taking up an offset or counter position through derivative contracts. Parties such as individuals or companies who perform hedging are called Hedgers. The hedger thus aims to eliminate volatility against fluctuating prices of underlying securities and protect herself/himself from any downsides.

Speculators
Speculation is a very common technique used by traders and investors in the derivatives market. It is based on when traders have a strong viewpoint regarding the market behavior of any underlying security and though it is risky, if the Produits dérivés gamer viewpoint is correct, the speculation may reward with attractive payoffs. Thus, speculators use derivative contracts with a view to make profit from the subsequent price movements. They do not have any risk to hedge, in fact, they operate at a relatively high-risk level in anticipation of profits and provide liquidity in the market.

Arbitrageurs
Arbitrage is a strategy in which the participant (or arbitrageur) aims to make profits from the price differences which arise in the investments made in the financial markets as a result of mispricing. Arbitrageurs aim to earn low risk profits by taking two different positions in the same or different contracts (across different time periods) or on different exchanges to in-cash on price discrepancies or market inefficiencies.

Margin Traders
Margin is essentially the collateral amount deposited by an investor investing in a financial instrument to the counterparty in order to cover for the credit risk associated with the investment. In margin trading, the trader or investor is not required to pay the total value of your position upfront. Instead, they only need pay the margin amount which may vary and are usually fixed by the stock exchanges considering factors like volatility. Thus, margin traders buy and sell securities over a single session and square off their position on the same day, making a quick payoff if their speculations are right.

Criticism of derivatives
While derivatives provide numerous benefits and have significantly impacted modern finance and markets, they pose many risks too. In a 2002 letter to Berkshire Hathaway shareholders, Warren Buffet even described derivatives as “financial weapons of mass destruction”.

Derivatives are more highly leveraged due to relatively relaxed regulations surrounding them, and where one may need to put up half the money or more with buying other securities, derivatives traders can get by with just putting up a few percentage points of the total value of a derivatives contract as a margin. If the price of the underlying asset keeps falling, covering the margin account can lead to enormous losses. Derivatives are thus often criticized as they may allow investors to obtain unsustainable positions that elevates systematic risk so much that it can be equated to legalized gambling. Derivatives are also exposed to counterparty credit risk wherein there is scope of default on the contract by any of the parties involved in the contract. The risk becomes even greater while trading on OTC markets which are less regulated.

Derivatives have been associated with a number of high-profile credit events over the past two decades. For instance, in the early 1990s, Procter and Gamble Corporation lost more than $100 million in transactions in equity swaps. In 1995, Barings collapsed when one of its traders lost $1.4 billion (more than twice its then capital) in trading equity index derivatives.

The amounts involved with derivatives-related corporate financial distresses in the 2000s increased even more. Two such events were the bankruptcy of Enron Corporation in 2001 and the near collapse of AIG in 2008. The point of commonality among these events was the role of OTC derivative trades. Being an AAA-rated company, AIG was being exempted from posting collateral on most of its derivatives trading in 2008. In addition, AIG was unique among CDS market participants and acted almost exclusively as credit protection seller. When the global financial crisis reached its peak in late 2008, AIG’s CDS portfolios recorded substantial mark-to-market losses. Consequently, the company was asked to post $40 billion worth of collateral and the US government had to introduce a $150 billion financial package to prevent AIG, once the world’s largest insurer by market value, from filing for bankruptcy.

Conclusion
Derivatives were essentially created in response to some fundamental changes in the global financial system. If correctly handled, they help improve the resilience of the system, hedge market risks and bring economic benefits to the users. Thus, they are expected to grow further with financial globalization. However, past credit events have exposed many weaknesses in the organization of their trading. The aim is to minimize the risks associated with such trades while enjoying the benefits they bring to the financial system. An important challenge is to design new rules and regulations to mitigate the risks and to promote transparency by improving the quality and quantity of statistics on derivatives markets.

A financial market refers to a marketplace where various kinds of financial securities such as stocks, bonds, commodities, etc. are traded. The term ‘market’ can also refer to exchanges that are legal organizations that facilitate the trade of financial securities between buyers and sellers. In any case, these markets are categorized based of the type of financial securities that are traded through them. One such financial market is the Derivatives Market.

Derivatives market thus refers to the financial marketplace where derivative instruments such as futures, forwards and options contracts are traded between counterparties.

It was during the 1980s and 1990s that the financial markets saw a major growth in the trade of derivatives. A derivative is a financial instrument whose value is derived from the value of an underlying asset such as stocks, bonds, currencies, commodities, interest rates and/or different market indices. These underlying assets have fluctuating prices and returns, and derivatives provides a means to investors to reduce the risk exposure and leverage profits on these assets. Thus, derivatives are an essential class of financial instruments and central to the modern financial markets providing not just economic benefits but also resilience against risks. The most common derivatives include futures, forwards, options and swap contracts.

As per the European Securities and Markets Authority (ESMA), derivatives market has grown impressively (around 24 percent per year in the last decade) into a truly global market with over €680 trillion of notional amount outstanding. The interest rate derivatives (IRDs) accounted for 82% of the total notional amount outstanding followed by currency derivatives at 11%.

Main types of derivative contracts
Derivatives derive their value from an underlying asset, or simply an ‘underlying’. There is a wide range of financial instruments that can be an underlying for a derivative such as equities or equity index, fixed-income instruments, foreign currencies, commodities, and even other securities. And thus, depending on the underlying, derivative contracts can derive their values from corresponding equity prices, interest rates, foreign exchange rates, prices of commodities and probable credit events. The most common types of derivative contracts are elucidated below:

Forwards and Futures
Forward and futures contracts share a similar feature: they are an agreement between two parties to buy or sell a specified quantity of an underlying asset at a specified price (or ‘exercise price’) on a predetermined date in the future (or ‘expiration date’). While forwards are customized contracts i.e., they can be tailor-made according to the asset being traded, expiry date and price, and traded Over-the-Counter (OTC), futures are standardized contracts traded on centralized exchanges. The party that buys the underlying is said to be taking a long position while the party that sells the asset takes a short position and both parties are obligated to fulfil their part of the contract.

Options
An option contract is a financial derivative that gives its holder the right (but not the obligation) to trade an underlying asset at a price set in advance irrespective of the market price at maturity. When an option is bought, its holder pays a fixed amount to the option writer as cost for this flexibility of trading that the option provides, known as the premium. Options can be of the types: call (right to buy) or put (right to sell).

Swaps
Swaps are agreements between two counterparties to exchange a series of cash payments for a stated period of time. The periodic payments charged can be based on fixed or floating interest rates, depending on contract terms decided by the counterparties. The calculation of these payments is based on an agreed-upon amount, called the notional principal amount (or just notional).

Exchange-traded vs Over-the-counter Derivatives Market
Exchange-traded derivatives markets
Exchange-traded derivatives markets are standardized markets for derivatives trading and follows rules set by the exchange. For instance, the exchange sets the expiry date of the derivatives, the lot-size, underlying securities on which derivatives can be created, settlement process etc. The exchange also performs the clearing and settlement of trades and provide credit guarantee by acting as a counterparty for every trade of derivatives. Thus, exchanges provide a transparent and systematic course of action for any derivatives trade.

Over-the-counter markets
Over-the-counter (also known as “OTC”) derivatives markets on the other hand, provide a lesser degree of regulations. They were almost entirely unregulated before the financial crisis of 2007-2008 (also a time when derivatives markets were criticized, and the blame was placed on Credit Default Swaps). OTCs are customized markets and run by dealers who hedge risks by indulging in derivatives trading.

Types of market participants
The participants in the derivative markets can be categorized into different groups namely,

Hedgers
Hedging is a risk-neutralizing strategy when an investor seeks to protect a current or anticipated position in the market by limiting their risk exposure. They can do so by taking up an offset or counter position through derivative contracts. Parties such as individuals or companies who perform hedging are called Hedgers. The hedger thus aims to eliminate volatility against fluctuating prices of underlying securities and protect herself/himself from any downsides.

Speculators
Speculation is a very common technique used by traders and investors in the derivatives market. It is based on when traders have a strong viewpoint regarding the market behavior of any underlying security and though it is risky, if the viewpoint is correct, the speculation may reward with attractive payoffs. Thus, speculators use derivative contracts with a view to make profit from the subsequent price movements. They do not have any risk to hedge, in fact, they operate at a relatively high-risk level in anticipation of profits and provide liquidity in the market.

Arbitrageurs
Arbitrage is a strategy in which the participant (or arbitrageur) aims to make profits from the price differences which arise in the investments made in the financial markets as a result of mispricing. Arbitrageurs aim to earn low risk profits by taking two different positions in the same or different contracts (across different time periods) or on different exchanges to in-cash on price discrepancies or market inefficiencies.

Margin Traders
Margin is essentially the collateral amount deposited by an investor investing in a financial instrument to the counterparty in order to cover for the credit risk associated with the investment. In margin trading, the trader or investor is not required to pay the total value of your position upfront. Instead, they only need pay the margin amount which may vary and are usually fixed by the stock exchanges considering factors like volatility. Thus, margin traders buy and sell securities over a single session and square off their position on the same day, making a quick payoff if their speculations are right.

Criticism of derivatives
While derivatives provide numerous benefits and have significantly impacted modern finance and markets, they pose many risks too. In a 2002 letter to Berkshire Hathaway shareholders, Warren Buffet even described derivatives as “financial weapons of mass destruction”.

Derivatives are more highly leveraged due to relatively relaxed regulations surrounding them, and where one may need to put up half the money or more with buying other securities, derivatives traders can get by with just putting up a few percentage points of the total value of a derivatives contract as a margin. If the price of the underlying asset keeps falling, covering the margin account can lead to enormous losses. Derivatives are thus often criticized as they may allow investors to obtain unsustainable positions that elevates systematic risk so much that it can be equated to legalized gambling. Derivatives are also exposed to counterparty credit risk wherein there is scope of default on the contract by any of the parties involved Produits dérivés cinéma in the contract. The risk becomes even greater while trading on OTC markets which are less regulated.

Derivatives have been associated with a number of high-profile credit events over the past two decades. For instance, in the early 1990s, Procter and Gamble Corporation lost more than $100 million in transactions in equity swaps. In 1995, Barings collapsed when one of its traders lost $1.4 billion (more than twice its then capital) in trading equity index derivatives.

The amounts involved with derivatives-related corporate financial distresses in the 2000s increased even more. Two such events were the bankruptcy of Enron Corporation in 2001 and the near collapse of AIG in 2008. The point of commonality among these events was the role of OTC derivative trades. Being an AAA-rated company, AIG was being exempted from posting collateral on most of its derivatives trading in 2008. In addition, AIG was unique among CDS market participants and acted almost exclusively as credit protection seller. When the global financial crisis reached its peak in late 2008, AIG’s CDS portfolios recorded substantial mark-to-market losses. Consequently, the company was asked to post $40 billion worth of collateral and the US government had to introduce a $150 billion financial package to prevent AIG, once the world’s largest insurer by market value, from filing for bankruptcy.

Conclusion
Derivatives were essentially created in response to some fundamental changes in the global financial system. If correctly handled, they help improve the resilience of the system, hedge market risks and bring economic benefits to the users. Thus, they are expected to grow further with financial globalization. However, past credit events have exposed many weaknesses in the organization of their trading. The aim is to minimize the risks associated with such trades while enjoying the benefits they bring to the financial system. An important challenge is to design new rules and regulations to mitigate the risks and to promote transparency by improving the quality and quantity of statistics on derivatives markets.