Barings Bankruptcy And Financial Derivatives

This is a systematic source which tries to explain how and why the 233-year-old and the World's oldest merchant bank went into bankruptcy in a few days. It includes three parts with 10 separate chapters. Part 1 first describes what happened, then traces the birth and historical glory of the Barings bank and family, and finally how it was sold to the Internationale Nederlanden Groep (ING). As many terms of the financial derivatives are used in the first part, the book tries to provide an easy and systematic way to clarify the related financial derivatives products in part 2. Part 2 first gives a general discussion of the financial derivatives and a brief review of the historical development, growth and magnitude of the financial derivatives markets. It then concentrates on futures and options in two separate chapters. Finally, it explains the hedging and speculating functions of financial derivatives and how they can be used in combination to achieve particular objectives. Part 3 is the most important part of this book. It first provides necessary information on the Japanese financial markets and then analyzes how a single trade could have the power to bring down the Barings. Finally, it provides the lessons from the Leeson's case.