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The purpose of this paper is to explain and analyze recent US Congressional, Obama Administration, and financial services industry initiatives to reform and regulate the market for OTC derivatives.

The paper outlines Congressional committee bills, other Obama Administration initiatives, and industry self‐regulatory initiatives and discusses underlying current issues such as which derivatives would and would not have to be cleared through central counterparties (CCPs); how standardized and customized derivatives would be distinguished from each other; potential margin, business conduct, reporting, and recordkeeping standards for OTC derivatives dealers; how fraud, market manipulation, and other market abuses would be policed; possible limitations on the types of parties that may participate in unregulated derivatives; possible resolution of the sometimes confusing and overlapping authority of the SEC and CFTC over OTC derivatives; how and by which federal or state authority credit default swaps (CDS) might be regulated; the potential for regulatory arbitrage; and the danger that stringent regulation in the USA will drive OTC derivatives business offshore.

Unlike markets for other financial instruments, derivatives market participants, largely through ISDA, have for some time cooperated closely with the New York Fed and engaged in a myriad self‐policing activities. Time will tell whether this existing framework, combined with the redoubled self‐policing efforts of market participants, will cause policymakers to seek appropriate legislation that will not threaten the preservation of the OTC derivatives market in the USA.

The paper presents a clear and detailed guide and explanation of recent regulatory initiatives and underlying issues.

To better understand corporate risk management practice in Hong Kong and Singapore. To explore popular perception that use of derivatives in Hong Kong and Singapore lags that in the US. To explore possible speculative use of derivatives in these Asian countries.

A survey of non‐financial corporations using the format of the 1998 Wharton study. I investigated the extent to which derivatives are used, how they are used, and methods for their oversight.

Derivatives are used more extensively in Hong Kong and Singapore than in the US. They are particularly popular for managing foreign exchange risk. Their use is more speculative than is common in the US; that is, market predictions play a significant role in the size and timing of hedge trades and derivatives are often used for active management of exposures. A lack of controls and management oversight (such as derivatives policies, regular valuations) is apparent, despite the extent of derivatives use.

Potential bias may have arisen due to the method used for recruiting survey respondents. In this study post‐graduate students contacted and interviewed company staff, often based on their personal contacts. In contrast, the Wharton surveys have been mailed to potential respondents. Students may have been more likely to select companies that traded derivatives. The sample size (131 firms) is smaller than that of the Wharton studies, but probably sufficient to establish common trends.

Need to address poor oversight of derivatives trading in order to prevent further disasters. Need to scrutinise the speculative use of derivatives to ensure that it is value‐adding for firm owners.

To highlight the extent of speculative use of derivatives in Hong Kong and Singapore. To encourage further scrutiny and controls over the use of derivatives by directors of and investors in non‐financial corporations in these countries.

Nowadays, a very interesting issue that matters both to academics and practitioners is the necessity and/or the usefulness of financial market regulation. This topic has many alternative dimensions, one of which concerns the derivative listing process. The main objective of the derivative's market regulatory authorities is the profitability of its members and the good performance of the exchange. The purpose of this paper is to investigate empirically the specific criteria that have governed the regulation process with respect to the derivative listing in the Athens Derivatives Exchange (ADEX).

The econometric part of the paper consists of two steps. The first step, deals with the estimation of the volatility, the default probability and the corporate governance provision index for each candidate firm. The second step consists of the utilization of a logit regression for the determination of the regressors and their significance in explaining which firms should be included into the derivatives and non‐derivatives groups. This analysis is extended through a rolling window technique that captures the time varying characteristics of the estimated coefficients of the derivatives listing strategy implemented by the ADEX.

According to the empirical findings, the ADEX's regulatory authorities have considered mainly the corresponding firms' capitalization while the creditworthiness and the managerial characteristics of the candidates have been adopted only partially.

To the best of the authors' knowledge, the existing literature is confined to US markets and nothing has been done with respect to European Derivatives Markets. This paper investigates the Greek case, the Athens Derivatives Exchange. In addition to the factors investigated by Mayhew and Mihov and Jennings and Starks, the authors have extended their analysis to include such factors as creditworthiness and managerial characteristics of firms.

The purpose of this paper is to investigate Swedish non‐financial firms’ use of derivatives in 2003 and to compare the results with an earlier study investigating Swedish firms in 1996. This comparison is motivated by our interest in if and how the derivative practices of firms have changed over the seven years that passed between the two surveys.

Surveys are used to make comparisons between years. For this study, the authors used a similar questionnaire as Alkebäck and Hagelin, and investigate a similar sample of firms. Firms are classified according to firm size and industry to study changes in derivative usage for different types of firms.

The results show among other things that: 59 per cent of the Swedish firms use derivatives today compared to 52 per cent in 1996; this relatively modest change for the total sample hides significant increases in derivatives usage for small and medium sized firms; the use of derivatives for hedging the balance sheet among Swedish firms in 2003 is higher than for other countries but lower than for Swedish firms in 1996 suggesting that Swedish firms conform to international practice; and the issue of greatest concern to Swedish firms in 1996, lack of knowledge about derivatives within the firm, concerns Swedish firms little today.

As with other survey research, a major caveat is that responses represents opinions. It cannot be verified that the opinions coincide with actions. Further research could improve on the understanding of firms derivatives use by including more detailed data, different time spans, and larger samples.

Provides evidence of the changes in the use of derivatives of Swedish firms.

The esoteric area of financial derivatives has become quite salient in light of the financial crisis of the last few years. In the public sector, state and local governments have increasingly employed derivatives in their bond financings. This paper analyzes state and local governments’ use of a specific type of municipal derivative instrument (a floating-to-fixed interest rate swap) in a specific type of transaction (bond refinancing). The paper provides a case study of an executed bond refinancing transaction that employed a floating-to-fixed interest rate swap quantifying the substantial long-term costs financial derivatives can impart on state and local governments. The paper concludes with some specific lessons learned about debt-related derivative usage for public financial managers and offers some suggestions for further empirical and theoretical research in this area of public financial management.

In order to meet the requests of exploring environmental-friendly and multifunctional lubricant additives, some novel dimercaptothiadiazole derivatives containing hydroxyl are prepared and used as antiwear (AW) and extreme-pressure (EP) additives in biodegradable lithium grease. The paper aims to discuss these issues.

The tribological performances of the grease samples containing these derivatives are evaluated by using a four-ball tester. X-ray absorption near edge structure (XANES) spectroscopy is used to analyze the chemistry of tribofilms under AW/EP regime, and thermal films are also considered for comparison.

The tribological tests show that these derivatives are all effective in reducing wear, especially at lower additive concentrations, but they are basically failed in reducing friction. They are also helpful in improving the EP characteristic of the base grease. The thermal films generated by these derivatives are composed of adsorbed organic sulfide and ferrous sulfate, though for short-chain derivatives, organic sulfide is the only component at 5.0 wt.%. Ferrous sulfide is the main component of the tribofilms formed by these derivatives at various additive concentrations. But for short-chain derivatives, these tribofilms consist of ferrous sulfide and ferrous disulfide at 5.0 wt.%, and the appearance of disulfide suggests that the interfacial temperature between the upper ball and three lower balls under these conditions is considerably low. The EP films generated by short-chain derivatives are all composed of organic sulfide and ferrous sulfide, while for long-chain derivatives, ferrous sulfide is the main component.

These low-toxic and oil-soluble dimercaptothiadiazole derivatives are effective in improving the tribological characteristic of the biodegradable lithium grease, and these heterocyclic derivatives may be good substitutes for some harmful traditional additives.

The use of weather derivatives is impaired with a basis risk which diminishes the hedging effectiveness and hinders the distribution of these risk management instruments in the agricultural sector. A frequently suggested approach to reduce the basis risk is the use of mixed indices composed of several weather variables. The purpose of this paper is to compare the hedging effectiveness of a simple temperature‐based and a simple precipitation‐based weather derivative with that of a derivative based on a mixed index of two weather variables.

The basis of this comparison are empirical yield time series of the winter wheat production of 32 farms located in central Germany, as well as daily temperature and precipitation data collected by selected weather stations over several years. Insurance is structured as an option on an accumulated weather index and priced by index‐value simulation. In addition, the bootstrapping method is used to improve statistical reliability. The hedging effectiveness is measured non‐parametrically regarding the relative reduction of the standard deviation of winter wheat revenues caused by using weather derivatives.

The results reveal that mixed index‐based weather derivatives have a significantly higher potential to reduce the risk of winter wheat revenues than simple index‐based weather derivatives. However, using mixed index‐based weather derivatives does not lead to a significantly higher hedging effectiveness than the simultaneous use of several simple index‐based weather derivatives. Moreover, simple index‐based weather derivatives may more easily raise the interest of other industries which could serve as potential trading partners for the agricultural sector.

The authors analyzed the hedging effectiveness of weather derivatives based on simple and mixed indices with regard to the production of winter wheat in Central Germany. To confirm that the present results are generalizable, further research is required for other types of production apart from winter wheat cultivation and with respect to other regions besides Germany.

The focus and results of the present study are very relevant for farmers as well as for potential providers of weather derivatives. The results reconfirm that weather derivative providers should better offer different weather derivatives based on a simple index than complex derivatives that are based on a mixed index.

To the best of the authors' knowledge, this paper is the first that provides a comparative impact analysis of simple and mixed index‐based weather derivatives conducted for real individual farms with regard to their hedging effectiveness.

The purpose of this research is to study the weather risk management practices of agriculture producers. In particular, the authors look at the extent to which farmers use weather derivatives to complement insurance. Unlike insurance, weather derivatives mitigate risk associated with low intensity, high probability events and therefore offer the potential of a more complete hedge than insurance alone.

The authors conducted a survey of grain farmers in the province of Saskatchewan, Canada, a typical jurisdiction in which farmers tend to face weather events that are high in frequency but low in severity, to study the usage of weather derivatives compared to insurance and identify the hurdles to their usage.

The authors find that fewer than 10 percent of their respondents use weather derivatives. Consistent with previous literature in other contexts, they identify participation costs, especially lack of awareness, to be the most significant hurdle to their usage.

A limitation of this study is that the data were collected using a survey methodology and are therefore subject to the usual risks of bias associated with that approach. Moreover, because the authors' survey was delivered online, it may have favoured the participation of farmers that were more comfortable with technology and some bias may have also been introduced into the data as a result.

The authors' findings suggest that there is significant potential to improve farmers' ability to hedge weather risk and thereby improve economic outcomes if the major barriers to the usage of weather derivatives can be overcome. The study paves the way for further research to support the development of public policy strategies that could help farmers take advantage of weather derivatives as part of their inventory of risk management tools.

To the authors' knowledge this is the first study that quantifies the usage of weather derivatives by agriculture producers and identifies the hurdles.

The lessons and merits of changes in the recognition and disclosure of derivative instruments and hedging activities are still debated and are a major policy issue. Prior studies provide mixed evidences on the economic consequences of mandatory derivative instruments ' recognition and disclosure. This paper aims to provide empirical evidence on the impact of mandatory derivative instruments ' recognition and disclosure on managers’ risk-management behavior. More importantly, this paper aims to investigate the role of product market competition on the impact of mandatory derivative instruments ' recognition and disclosure on managers’ risk-management behavior.

This paper tests the author ' s hypotheses using the fixed-effects estimation technique, where it includes firm dummies in all the regressions. This approach enables to control for unobserved firm effects (fixed effects) on firms’ risk-management behavior that are assumed to be constant through time but vary across firms.

The author finds that mandatory recognition and disclosure of derivative instruments and hedging activities, on average, decreases firms’ market rate risk exposure. This finding suggests that after the implementation of the recognition and disclosure of derivative instruments and hedging activities required by Statement of Financial Accounting Standards No. 133 (SFAS 133), firms engage in more prudent risk-management activities to mitigate the potential cost of earnings volatility imposed by the standard. However, the decrease in market rate risk exposure is lower when the level of product market competition is higher. This finding is consistent with the idea that the recognition and disclosure of derivative instruments and hedging activities required by SFAS 133 unintentionally forces firms in competitive industries to engage in significant risk-taking. The result suggests that more disclosure in risk management may change risk-management incentives in undesirable ways if firms face the threat of entry in their product markets.

The results provide a new understanding on the role of product market competition on the effectiveness of mandatory derivative instruments ' recognition and disclosure. The findings imply that standard setters should take product market competition into consideration before making derivative instruments and hedging activities ' recognition and disclosure mandatory for all firms.

The paper contributes to the accounting literature by providing a new insight into the moderating role of product market competition in the accounting recognition and disclosure regulation and firms’ reporting behavior relation. Moreover, the paper extends the current literature on the effects of SFAS 133 on risk-management activities and sheds light on the impact of accounting regulations on firms’ real economic behavior.

In 1997, in this journal, Elizabeth Sheedy published a paper investigating exchange relationships in derivative markets. This paper was significant for two reasons. It was the first article to consider the marketing of these important financial instruments. Second, her article set out a forceful argument that relationships in this context were breaking down, and that the advantages associated with a relationship model of exchange had not appeared, and indeed had to some extent facilitated the series of well publicised derivative disasters. In this paper, the authors respond to Sheedy’s call for further research through an empirical examination of the over‐the‐counter equity derivatives market in the USA and Britain, arguing that while relationships in this market do, to a limited degree, exhibit characteristics atypical of wider financial services contexts, the relationship paradigm continues to be relevant, and indeed inherent, to over‐the‐counter derivative exchange.