Foreign exchange transactions can be traced back to Britain in the14th century, but the foreign exchange derivatives market came into being and developed under the profound historical background and economic environment in the 1970s.
First, after the collapse of the Bretton Woods system, the IMF held a meeting in Jamaica on 1976 and reached the Jamaica Accord, which fundamentally reformed the international monetary system. Floating exchange rate system replaced fixed exchange rate system, and many countries gradually relaxed interest rate control. The wave of global financial liberalization has led to drastic fluctuations in exchange rates and interest rates in various countries, and the risks in financial markets have been increasing. In order to reduce and avoid risks and achieve the purpose of maintaining value, modern financial derivatives came into being.
Second, economic globalization has promoted the globalization of financial activities and financial markets. After the disintegration of the Bretton Woods system, a large amount of funds flowed across borders, and the oil and international debt crisis promoted the development of the international financial market to some extent. Countries have generally relaxed restrictions on domestic and foreign financial institutions and foreign investors. Changes in macroeconomic factors further increase market risks, increase market demand for foreign exchange derivatives, and promote the development of the derivatives market.
In this context, financial institutions continue to create new financial instruments to meet the needs of traders to avoid risks, and a large number of foreign exchange derivatives appear and are widely used, thus expanding the foreign exchange market from the traditional trading market to the derivatives trading market and developing rapidly.
In 1960s, some simple foreign exchange derivatives, such as foreign exchange forwards and foreign exchange swaps, began to appear in western financial markets. 1972 In May, CME formally established the international money market and launched the world's first financial futures-foreign exchange futures, including multi-currency foreign exchange futures contracts including British pound, Canadian dollar, German mark, French franc, Japanese yen and Swiss franc, which marked the emergence of derivative markets in the foreign exchange market and was also the earliest financial futures. In 1980s, foreign exchange options, interest rate options and other new products were listed one after another. 1980, currency swap has gradually developed in the OTC market. 198 1 salomon brothers Company successfully handled the currency swap business of US dollars with German marks and Swiss francs for IBM and the World Bank in the United States. At this point, major foreign exchange derivatives have appeared in the market, the international derivatives market has entered a stage of rapid development, and financial derivatives such as interest rates, indexes and stocks have appeared one after another. Since then, forex futures trading has developed rapidly in English-speaking countries such as Britain, Canada and Australia, as well as countries and regions with close historical ties with Britain. In recent years, foreign exchange futures have also developed rapidly in continental Europe, Brazil, South Korea, India, Israel, Hungary, Mexico and Taiwan Province Province.
2. The foreign exchange derivatives market is developing rapidly with rich varieties.
After decades of development, foreign exchange derivative business is becoming more and more mature, with complete varieties, and there are all kinds of foreign exchange derivative business between various maturities and currencies. With the continuous financial innovation activities, many new foreign exchange businesses have emerged, such as forward swap, index swap, cartel swap, interruptible swap, exhibition swap, shared forward contract, proportional forward contract, double-term right and forward reversal option. The trading volume of foreign exchange derivatives has far exceeded the spot trading volume of foreign exchange, and continues to rise steadily.
In addition, with the rise of emerging markets, the foreign exchange derivatives market has also undergone profound changes. In the traditional foreign exchange market, the OTC market has an absolute advantage in scale. However, in developing countries, because the status and role of banks are different from those in developed countries, the on-site foreign exchange derivatives market has maintained a strong development momentum, showing a situation in which the on-site and off-site markets are equally divided. Since 2000, the global trading volume of foreign exchange futures and options (including foreign exchange index) products has been steadily increasing, and the proportion of all kinds of on-market derivatives trading volume has also been steadily increasing, which not only provides effective hedging tools for investors, financial institutions and other economic entities, but also provides new profit-making means for arbitrageurs and speculators.