Financial engineering is the product of the market's constant pursuit of higher financial efficiency. In a broad sense, financial engineering refers to all technical development that uses engineering means to solve financial problems, including not only financial product design, but also financial product pricing, trading strategy design, financial risk management and other aspects.

Narrow financial engineering mainly refers to the use of advanced mathematics and communication tools, on the basis of existing basic financial products, to carry out different forms of combination decomposition, in order to design new financial products that meet customer needs and have specific profit and loss characteristics.

With the development of investment banks and capital markets, financial engineering is a highly applied financial discipline. It has a wide range of applications, from corporate wealth management to financial transactions, to investment and currency management, especially risk management.

The basic tools of financial engineering are forward, futures, swaps and options, and more complex derivatives formed by further combining these basic derivatives.

In financial engineering, its core lies in developing and designing new financial products or businesses, and its essence lies in improving efficiency, including:

1. Create new financial instruments, such as creating the first zero coupon bond and the first swap contract;

2. Development and application of existing tools, such as applying futures trading to new fields and developing a large number of options and swaps;

3. Combine the existing financial tools and means with combinatorial decomposition technology to compound new financial products, such as forward swaps and futures options, and build a new financial structure.