Brazil's Central Bank has decided that financial derivatives
must play a bigger role in consolidating the country's hard-won
but fragile stability. In February, it authorized the use of
credit derivatives for the first time, although in a restricted
form. In March, the bank began selling currency swaps with
floating rate treasury bills - also a first.
How to Live with Risk and Volatility
A culture of risk management is taking hold in Latin America, particularly in Brazil and Mexico, where the products offered and their use are increasingly like those in developed markets.
Brazil is not the only regional market on the move. In
Mexico, the MexDer derivatives exchange, which opened its doors
in 1998 but only really got going last year, continues to grow.
It won't match last year's performance - growth in the number
of contracts traded was 1,000% from a tiny base - but a healthy
25% increase in trades seems well within reach during 2002.
Business on Mexico's much bigger over-the-counter (OTC) market
is firmly on the up.
In Argentina, of course, the market has virtually ceased to
exist. Says Mark Yale, managing director...
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