When it comes to buying, selling, or renting properties, having a reliable and professional estate agent by your side can make a significant difference. Brittania Estate Agents is a well-established and reputable agency that has been serving clients with their real estate needs for several years. In this comprehensive guide, we will delve into the services offered by Brittania Estate Agents, their approach to customer satisfaction, and the benefits of working with them. Whether you are a first-time buyer, a seasoned investor, or someone looking to rent a property, this guide will provide you with all the essential information you need.

Company Overview

Brittania Estate Agents is a prominent real estate agency with multiple offices located across the country. The agency specializes in assisting clients with various real estate transactions, including buying, selling, and renting residential and commercial properties. With a team of experienced and knowledgeable agents, Brittania Estate Agents has established a solid reputation for delivering excellent results and providing exceptional customer service.

Services Offered:
Buying Properties:

If you are in the market to buy a property, Brittania Estate Agents can be your trusted partner throughout the process. Their team of dedicated agents will work closely with you to understand your requirements, preferences, and budget. They will provide you with a wide range of property options that match your criteria and guide you through property viewings. Once you have found your ideal property, their agents will assist you with negotiations, legal processes, and ensure a smooth transaction from start to finish.

Selling Properties:

When it's time to sell your property, Brittania Estate Agents can provide you with expert guidance and support. Their agents will conduct a thorough market analysis to determine the optimal selling price for your property, ensuring you get the best possible value. They will create a comprehensive marketing plan to promote your property through various channels, including online listings, social media, and their extensive network. Furthermore, their agents will handle inquiries, organize viewings, negotiate offers, and manage the sales process efficiently, ensuring a successful sale.

Renting Properties:

For those looking to rent a property, Brittania Estate Agents offers a range of rental services. They maintain an extensive database of rental properties, catering to different budgets and preferences. Their agents will assist you in finding suitable properties, arranging viewings, and guiding you through the rental application process. With their expertise, they can help you negotiate favorable rental terms and ensure that all necessary paperwork is handled correctly.

Customer Satisfaction:

One of the core values of Brittania Estate Agents is to prioritize customer satisfaction. They understand that real estate transactions can be complex and stressful, and they aim to make the process as smooth and hassle-free as possible. The agency emphasizes clear communication, transparency, and professionalism, ensuring that their clients are well-informed at every stage. Whether you are a buyer, seller, or tenant, their agents will provide personalized attention, address your concerns, and go the extra mile to meet your needs.

Benefits of Working with Brittania Estate Agents:
Expertise and Knowledge:

Brittania Estate Agents has a team of experienced and knowledgeable agents who are well-versed in the local real estate market. They stay up-to-date with the latest trends, regulations, and pricing dynamics, enabling them to provide accurate advice and guidance. Their expertise can help you make informed decisions, whether you are buying, selling, or renting a property.

Extensive Network:

With multiple offices and a broad network of industry professionals, Brittania Estate Agents has access to a wide range of resources. This network allows them to connect buyers with sellers, tenants with landlords, and collaborate with other professionals, such as solicitors and mortgage brokers, to ensure a seamless experience for their clients.

Tailored Solutions:

Brittania Estate Agents understands that every client is unique, with different requirements and objectives. They take the time to understand your specific needs and tailor their services accordingly. Whether you are looking for a family home, an investment property, or commercial space, they will work closely with you to fulfill your goals.

Comprehensive Support:

From the initial consultation to the final transaction, Brittania Estate Agents provides comprehensive support at every step. Their agents will guide you through the entire process, ensuring that you are well-informed and confident in your decisions. They handle the Estate Agents North Wales paperwork, negotiate on your behalf, and address any challenges that may arise, ensuring a stress-free experience.

Long-term Relationships:

Brittania Estate Agents values long-term relationships with their clients. They strive to build trust and loyalty by delivering exceptional service and exceeding expectations. Whether you require their services for a single transaction or ongoing real estate needs, they are committed to being your reliable partner in the property market.

Conclusion:

Brittania Estate Agents is a trusted and reputable agency that offers a wide range of real estate services, including buying, selling, and renting properties. With their experienced team, personalized approach, and commitment to customer satisfaction, they have established themselves as a go-to choice for individuals and investors alike. Whether you are a first-time buyer, a seller looking to maximize returns, or a tenant searching for the perfect rental property, Brittania Estate Agents can provide you with the expertise and support you need for a successful real estate transaction.

When it comes to buying, selling, or renting properties, having a reliable and professional estate agent by your side can make a significant difference. Brittania Estate Agents is a well-established and reputable agency that has been serving clients with their real estate needs for several years. In this comprehensive guide, we will delve into the services offered by Brittania Estate Agents, their approach to customer satisfaction, and the benefits of working with them. Whether you are a first-time buyer, a seasoned investor, or someone looking to rent a property, this guide will provide you with all the essential information you need.

Company Overview

Brittania Estate Agents is a prominent real estate agency with multiple offices located across the country. The agency specializes in assisting clients with various real estate transactions, including buying, selling, and renting residential and commercial properties. With a team of experienced and knowledgeable agents, Brittania Estate Agents has established a solid reputation for delivering excellent results and providing exceptional customer service.

Services Offered:
Buying Properties:

If you are in the market to buy a property, Brittania Estate Agents can be your trusted partner throughout the process. Their team of dedicated agents will work closely with you to understand your requirements, preferences, and budget. They will provide you with a wide range of property options that match your criteria and guide you through property viewings. Once you have found your ideal property, their agents will assist you with negotiations, legal processes, and ensure a smooth transaction from start to finish.

Selling Properties:

When it's time to sell your property, Brittania Estate Agents can provide you with expert guidance and support. Their agents will conduct a thorough market analysis to determine the optimal selling price for your property, ensuring you get the best possible value. They will create a comprehensive marketing plan to promote your property through various channels, including online listings, social media, and their extensive network. Furthermore, their agents will handle inquiries, organize viewings, negotiate offers, and manage the sales process efficiently, ensuring a successful sale.

Renting Properties:

For those looking to rent a property, Brittania Estate Agents offers a range of rental services. They maintain an extensive database of rental properties, catering to different budgets and preferences. Their agents will assist you in finding suitable properties, arranging viewings, and guiding you through the rental application process. With their expertise, they can help you negotiate favorable rental terms and ensure that all necessary paperwork is handled correctly.

Customer Satisfaction:

One of the core values of Brittania Estate Agents is to prioritize customer satisfaction. They understand that real estate transactions can be complex and stressful, and they aim to make the process as smooth and hassle-free as possible. The agency emphasizes clear communication, transparency, and professionalism, ensuring that their clients are well-informed at every stage. Whether you are a buyer, seller, or tenant, their agents will provide personalized attention, address your concerns, and go the extra mile to meet your needs.

Benefits of Working with Brittania Estate Agents:
Expertise and Knowledge:

Brittania Estate Agents has a team of experienced and knowledgeable agents who are well-versed in the local real estate market. They stay up-to-date with the latest trends, regulations, and pricing dynamics, enabling them to provide accurate advice and guidance. Their expertise can help you make informed decisions, whether you are buying, selling, or renting a property.

Extensive Network:

With multiple offices and a broad network of industry professionals, Brittania Estate Agents has access to a wide range of resources. This network allows them to connect buyers with sellers, tenants with landlords, and collaborate with other professionals, such as solicitors and mortgage brokers, to ensure a seamless experience for their clients.

Tailored Solutions:

Brittania Estate Agents understands that every client is unique, with different requirements and objectives. They take the time to understand your specific needs and tailor their services accordingly. Whether you are looking for a family home, an investment property, or commercial space, they will work closely with you to fulfill your goals.

Comprehensive Support:

From the initial consultation to the final transaction, Brittania Estate Agents provides comprehensive support at every step. Their agents will guide you through the entire process, ensuring that you are well-informed and confident in your decisions. They handle the paperwork, negotiate on your behalf, and address any challenges that may arise, ensuring a stress-free experience.

Long-term Relationships:

Brittania Estate Agents values long-term relationships with their clients. They strive to build letting agents North Wales trust and loyalty by delivering exceptional service and exceeding expectations. Whether you require their services for a single transaction or ongoing real estate needs, they are committed to being your reliable partner in the property market.

Conclusion:

Brittania Estate Agents is a trusted and reputable agency that offers a wide range of real estate services, including buying, selling, and renting properties. With their experienced team, personalized approach, and commitment to customer satisfaction, they have established themselves as a go-to choice for individuals and investors alike. Whether you are a first-time buyer, a seller looking to maximize returns, or a tenant searching for the perfect rental property, Brittania Estate Agents can provide you with the expertise and support you need for a successful real estate transaction.

Vape juice, also known as e-liquid or e-juice, is a vital component of electronic cigarettes or vaping devices. It is the liquid that gets heated and vaporized, producing the inhalable aerosol that users inhale. Vape juice comes in a wide variety of flavors, nicotine strengths, and compositions, allowing vapers to customize their vaping experience. In this guide, we will delve into the different aspects of vape juice, including its ingredients, flavors, nicotine levels, PG/VG ratios, and safety considerations.

Ingredients

Vape juice typically consists of four main ingredients: propylene glycol (PG), vegetable glycerin (VG), flavorings, and nicotine (optional). PG and VG serve as the base liquids, providing the foundation for the e-liquid. PG is a clear, odorless liquid that carries flavors well, while VG is a thicker, sweeter liquid that produces denser vapor clouds. The flavorings used in vape juice can be natural or artificial, offering a vast range of options such as fruity, dessert, or tobacco flavors. Nicotine, although optional, can be added in various strengths for those who desire it.

Flavors

The wide variety of flavors available in vape juice is one of the main reasons why vaping has become popular. Whether you prefer traditional tobacco flavors, sweet desserts, refreshing fruits, or even beverages, there is a flavor to suit every taste. Vape juice flavors can be categorized into several groups, including tobacco, menthol, fruit, dessert, candy, and beverage. Experimenting with different flavors is part of the fun in vaping, allowing users to discover their personal favorites.

Nicotine Levels

Nicotine is an addictive substance found in tobacco, and it can be added to vape juice in different strengths to accommodate individual preferences. Nicotine levels in vape juice are usually measured in milligrams per milliliter (mg/mL). Common nicotine strengths range from 0mg/mL for those who want a nicotine-free experience, to 3mg/mL, 6mg/mL, 12mg/mL, 18mg/mL, and even higher for heavier smokers or vapers. It is important to choose a nicotine strength that matches your nicotine dependence level or gradually decrease it if you wish to reduce your nicotine intake.

PG/VG Ratios

The ratio of propylene glycol (PG) to vegetable glycerin (VG) in vape juice can significantly affect the vaping experience. Different PG/VG ratios offer distinct characteristics in terms of throat hit, vapor production, and flavor intensity. A higher PG ratio, such as 70/30 or 60/40, provides a stronger throat hit and better flavor representation but produces less vapor. On the other hand, a higher VG ratio, such as 70/30 or 80/20, produces denser vapor clouds but may sacrifice a bit of throat hit and flavor. It is a matter of personal preference to find the right balance that suits your vaping style.

Safety Considerations

While vaping is generally considered safer than smoking traditional cigarettes, it is still essential to prioritize safety when using vape juice. Here are some key safety considerations:

Purchase from reputable sources:
Only buy vape juice from trusted manufacturers and retailers to ensure the quality and safety of the product.

Check for childproof packaging:
Vape juice bottles should have child-resistant caps to prevent accidental ingestion by children or pets.

Store properly:
Keep vape juice out of reach of children and pets, and store it in a cool, dry place away from direct sunlight.

Avoid DIY vape juice:
While some vapers enjoy making their own e-liquids, it requires expertise and knowledge to ensure proper mixing and safety. It is generally recommended to purchase cheap vape mods pre-made vape juice from reputable sources.

Be mindful of allergies:
Some individuals may have allergies or sensitivities to specific ingredients in vape juice, such as propylene glycol or certain flavorings. If you experience any adverse reactions, discontinue use and consult a healthcare professional.

Maintain your device:
Regularly clean and maintain your vaping device to ensure optimal performance and minimize the risk of leaks or malfunctions. Follow the manufacturer's instructions for cleaning and maintenance.

Keep liquids separate:
Store vape juice away from other household liquids, such as cleaning products or medications, to avoid accidental mixing or ingestion.

Educate yourself:
Stay informed about current research and updates regarding vaping and vape juice safety. Be aware of any potential risks associated with certain ingredients or practices.

Vape responsibly:
While vaping can be an enjoyable activity, it is important to use it responsibly. Follow any regulations or restrictions in your area, and respect the rights of those around you by vaping in designated areas or asking for permission when in public spaces.

Conclusion

Vape juice plays a crucial role in the vaping experience, offering a wide range of flavors, nicotine levels, and PG/VG ratios to cater to individual preferences. Understanding the ingredients, flavors, nicotine strengths, PG/VG ratios, and safety considerations associated with vape juice is essential for vapers to make informed choices and enjoy vaping responsibly. By following safety guidelines, purchasing from reputable sources, and staying informed, vapers can have a satisfying and enjoyable vaping experience while prioritizing their well-being.

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 produit dérivé 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 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 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 Produits dérivés séries 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.