Derivative instrument and Transition: Difference between pages

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A derivative instrument or contract is one whose value and other characteristics are derived from those of another asset or instrument (sometimes known as the Underlying Asset).
1. ''Climate change - financial risks''.
 
Abbreviation for climate transition, relating to financial risks that could arise from adjusting to a lower-carbon economy.
 
In this context, financial climate transition is distinct from the direct physical risks of climate change.
 
 
2. ''Risk-free rates - LIBOR and related transitions - conduct.''
 
In the context of risk-free rates, transition refers to the discontinuation of LIBOR and similar rates, and their replacement by other risk-free interest rates.
 
This transition is important both for non-financial corporates, and for financial institutions themselves, for example in relation to conduct.
 
 
3. ''Other contexts.''
 
Any other substantial and long term change.
 
Especially one carrying material risks and financial risks.


For example, a share option is a type of derivative contract, allowing the holder to buy shares at a certain predetermined strike price. The value of the share option derives from the current price of the related underlying share relative to the option strike price.


== See also ==
== See also ==
* [[Commodity risk]]
* [[Climate change]]
* [[Embedded derivative]]
* [[Climate Transition Benchmark]]
* [[Fixing instrument]]
* [[Climate Transition Finance Handbook]]
* [[Maturity]]
* [[Climate transition risk]]
* [[Notional principal]]
* [[Conduct]]
* [[Option]]
* [[ESG transition]]
* [[Strike price]]
* [[Fallback]]
* [[Tracker fund]]
* [[Financial Stability Board]]
* [[Underlying]]
* [[Fossil fuel]]
* [[Underlying asset]]
* [[IBOR transition]]
* [[Underlying price]]
* [[Just transition]]
 
* [[LIBOR]]
* [[LIBOR transition]]
* [[Material]]
* [[Paris Agreement]]
* [[Reputational risk]]
* [[Risk-free rates]]
* [[Stranded assets]]
* [[Synthetic LIBOR]]
* [[Tough legacy]]
* [[Transaction]]
* [[Transformation]]
* [[Transition finance]]
* [[Transition Pathway Initiative]]  (TPI)
* [[Transition plan]]
* [[Transition Plan Taskforce]]  (TPT)  - UK
* [[Transition risk]]
* [[Transition sukuk]]
* [[Translation]]


==Other links==
*[http://www.treasurers.org/node/8599  Masterclass: Derivatives, The Treasurer, December 2012]


*[http://www.treasurers.org/node/7849 Use and Misuse of Derivatives, Will Spinney, ACT 2012]
== External link ==
* [https://www.bankofengland.co.uk/knowledgebank/climate-change-what-are-the-risks-to-financial-stability Climate change - What are the risks to financial stability? Bank of England]


[[Category:Managing_Risk]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 07:25, 28 September 2022

1. Climate change - financial risks.

Abbreviation for climate transition, relating to financial risks that could arise from adjusting to a lower-carbon economy.

In this context, financial climate transition is distinct from the direct physical risks of climate change.


2. Risk-free rates - LIBOR and related transitions - conduct.

In the context of risk-free rates, transition refers to the discontinuation of LIBOR and similar rates, and their replacement by other risk-free interest rates.

This transition is important both for non-financial corporates, and for financial institutions themselves, for example in relation to conduct.


3. Other contexts.

Any other substantial and long term change.

Especially one carrying material risks and financial risks.


See also


External link