Free content

All weather derivative contracts for trading or speculative purposes should be accounted for at their fair value, with subsequent changes in fair value reported in earnings.

In this week's Learning Curve, we are presenting the Financial Accounting Standard Board's accounting standards for over-the-counter weather derivatives in connection with nontrading activities.

Trading books as well as debt portfolios of banks are exposed to a huge number of factors driving their mark-to-market value.

If financial markets behaved in the way assumed by the Black-Scholes option pricing model, crashes would never happen.

Credit Derivatives in various forms have been used by the interbank market for a number of years.

The simple business of lending to a corporate institution and sitting on the credit risk is not profitable these days.

In last week's issue of DW we looked at the treatment of credit risk mitigation in the recently released consultation paper by the European Commission on new capital adequacy rules for European Union financial institutions.

In last week's issue of DW we looked at the treatment of credit risk in the recently released consultation paper by the European Commission on new capital adequacy rules for European Union financial institutions, and compared it to similar proposals by the Basel Committee on Banking Supervision.

At the end of last month the European Commission published a consultation paper proposing new capital adequacy rules for European Union banks and securities houses.

Weather derivatives markets have traditionally been characterized as having a small number of participants and large bid-ask spreads, but this is rapidly changing.

The list of actual contracts in use is extensive and constantly evolving.

Since the summer of 1997, when the first weather derivatives transaction was recorded, we have witnessed the development of a new derivatives market in the United States, which is gradually expanding across the globe.