Question

Discuss how exponential growth and the "6 D's" of exponential growth relates to Derivatives and the Financial Markets. How have things changed and where do you think things will go in the future. Talk about the growth rate in the usage of derivatives, how regulation has changed the environment and what role will technology play.

Answer 1

EXPONENTIAL GROWTH ;

Exponential growth is a pattern of dara that shows greater increase with passing time In Finance , compound return cause exponential growth, the power of compounding is one of the most powerful force in Finance. Exponential growth in derivatives and Financial makes major role of expansion in future.

6 D's of Exponential growth in Derivatives and Financial market :

1) Digitized :

Digital information is easy to access, share, and distribute. It can spread at the speed of internet. In this Financial market hepls to Digitized and expansion of derivatives. Anything that becomes Digitized enters the same exponential growth to see in computing.

2) Deceptive :

In this financial markets and derivatives, when something start being Digitized, its initial period of growth is Deceptive because Exponential trends don't seem to grow very fast at first.

3) Disruptive :

The existing Financial market and derivatives is distributed by the new market Exponential technology create because digital technologies outperform in effectiveness and cost.

4) Demonetized :

In thia Exponential growth, money is increasingly remove from the equation as the technology become cheaper, often to the point of being free. In this financial way to software is less expensive to produce than hardware and copies are virtually free to access.

5) Dematerialized :

In this Exponential growth of Dematerialized as function of Financial growth that technology helps to expanding and digitalised in Financial market.

6) Democratized ;

Financial markets once something is Digitized, more people can have access to it. Powerful technologies are no longer only for government, large organisations and wealthy Financial institution.

Growth rate in usage of Derivatives :

Fintech has became the all encompassing catchwords for innovation and Disruptive development in the financial services industry. In the derivative world , sell and buy side firms are being encouraged to embrace the full range of new technologies.

There are many fintech project in the marketplace because firms tend to build their own system and solutions to address the different problems.

A critical but often overlooked aspects of a competent derivatives trending operations is the computer system used manage the risk , account for the position on a mark to market basis. One must also have an appreciation of these risks change wirh the progress of time and the evolution of price.