According to the expectation of the price trend of financial assets, such as currency interest rate or debt instrument price, foreign exchange rate, stock price or stock index, commodity futures price, etc., the financial products with their own value are estimated. Derivative financial instruments refer to new financial instruments derived from traditional financial instruments. Stock futures contracts, stock index futures contracts, option contracts and bond futures contracts are all derivative financial instruments. Derivative financial instruments, also known as derivative financial instruments and financial derivatives, are a concept corresponding to original financial instruments, which are derived from commodity contracts, bonds, stocks, foreign exchange and other original financial instruments. International Swaps and Derivatives Association (ISDA) describes financial derivatives as: "Bilateral contracts aimed at transferring risks for traders. When the contract expires, the amount owed by the trader to the other party is determined by the price of the basic commodity, securities or index. " The main functions of derivative financial instruments are: promoting the stability and development of financial markets, speeding up the transmission of economic information, forming its price, promoting the rational allocation of resources and the effective flow of funds, and enhancing the national financial macro-control ability. It can disperse and transfer risks and improve the economic efficiency of financial markets. Basic characteristics of derivative financial instruments 1, intertemporal transaction 2, leverage effect 3, uncertainty and high risk 4, hedging and speculative arbitrage * * * Classification of deposit derivative financial instruments (1) According to the type of basic instruments: 1, equity derivatives 2, currency derivatives 3 and interest rate derivatives (2) According to the characteristics of risk and return: symmetry and asymmetry (2) Speculative profit II. The hedging of derivative financial instruments (excluding hedging instruments) that are not recognized in the balance sheet or have been measured at cost shall be measured at fair value on the first implementation date, and the retained earnings shall be adjusted. Main functions of derivative financial instruments: 1. Risk avoidance function II. Price discovery function 3. Profit function. Financing and investment management tools. Basic characteristics of derivative financial instruments: 1. It has no value in itself, but its price changes with the prices of other tools 2. It has financial leverage 3. Product features are complex 4. The product design is quite flexible.