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Evolution of Value and Structure of Currency Derivatives Market

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  • Jaroslaw Pawlowski

Abstract

Purpose: The purpose of the paper is to present the results of the analysis concerning the evolution of the global currency derivatives market in the context of the ongoing transformations. Design/methodology/approach: The basis for achieving the assumed objective were literature studies, a review of external research results and an analysis of data on the global currency derivatives market, provided by the Bank for International Settlements. Findings: Based on the conducted research, it was observed that the global currency derivatives market was systematically developing in the analysed period. The leading share in this market, and therefore its importance, was characterised by the over-the-counter market, which provides greater possibilities of adapting instruments to the expectations of entities. Currency forwards & FX swaps were characterised by particular interest in over-the-counter trading, and currency futures in exchange trading. Research limitations/implications: The presented research is a preliminary analysis. The considerations presented herein focused on several selected issues determining the evolution of the global currency derivatives market. Therefore, the possibilities of evaluating the results and generalizing the conclusions are limited. Nevertheless, this study provides a basis for further research. Practical implications: Currency derivatives traded on the OTC market are a more popular tool for managing currency risk. This is due to the greater possibilities of adapting the instrument's terms to the specifics of a given entity and its expectations. Therefore, when analysing potential changes in the functioning of the exchange market for currency derivatives, it is worth paying attention to the importance of flexibility in shaping the terms of these instruments from the perspective of financial market participants. Originality/value: The article partly fills the research gap in the empirical studies on the evolution of the foreign exchange derivatives market. The conclusions formulated may find theoretical and practical application in analysed scope.

Suggested Citation

  • Jaroslaw Pawlowski, 2025. "Evolution of Value and Structure of Currency Derivatives Market," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 861-873.
    • Handle: RePEc:ers:journl:v:xxviii:y:2025:i:1:p:861-873
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    More about this item

    Keywords

    Currency risk; currency derivatives; currency derivatives market.;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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