David Gershon
David Gershon

Simplifying The Pricing Process Of Derivatives For The Buyside

There is a real need to make the derivative pricing process as simple and at the same time as accurate as possible says David Gershon.

First Published: e-Forex Magazine 11 / FOCUS / July, 2003

Although there are many sophisticated and knowledgeable participants on the buyside, there is a real need to make the derivative pricing process as simple and at the same time as accurate as possible.In the past few years, many buyside treasury departments have recognised the great saving potentials that are available through using better tailored hedging. As a result, many have started to use derivatives. Yet, managing derivatives against expected cash flows requires the buyside to be better tuned to the pricing and ongoing revaluations of derivatives.A problem is that many buyside participants have to look at their risk across a number of different asset classes. So while a sellside trader might be a specialist in foreign exchange, his counterparty on the corporate side may well have to consider how best to manage his risk in currencies, fixed-income and money market products and in some cases even equities.This emphasizes just how important it is for the buyside to have the tools, which allows it to price...continued

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