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Complex derivatives

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The intrinsic complexity of the financial derivatives market has emerged as both an incentive to engage in it, and a key source of its inherent instability. Regulators now faced with the challenge of taming this beast may find inspiration in the budding science of complex systems.

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Figure 1: The largest players in the derivatives market.

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Acknowledgements

The authors acknowledge support from the European FET Open Project FOC 'Forecasting Financial Crises' (No. 255987) and from the Working Group on Networks and Systemic risk, part of the Institute for New Economic Thinking's Financial Stability Research Program.

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Authors and Affiliations

  1. ETH Zürich, Zurich, 8092, Switzerland,

    Stefano Battiston

  2. IMT Alti Studi Lucca, Lucca, 55100, Italy

    Guido Caldarelli

  3. London Institute for Mathematical Sciences, London, W1K 2XF, UK

    Guido Caldarelli

  4. Deutsche Bundesbank, Frankfurt am Main, D-60431, Germany

    Co-Pierre Georg

  5. Oxford University, Oxford, OX1 1HP, UK

    Co-Pierre Georg & Robert May

  6. Columbia University, New York, 10027, USA

    Joseph Stiglitz

Authors
  1. Stefano Battiston
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  2. Guido Caldarelli
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  3. Co-Pierre Georg
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  4. Robert May
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  5. Joseph Stiglitz
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Corresponding author

Correspondence to Stefano Battiston.

Additional information

The views expressed in this Commentary do not necessarily reflect the views of Deutsche Bundesbank or the European System of Central Banks.

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Battiston, S., Caldarelli, G., Georg, CP. et al. Complex derivatives. Nature Phys 9, 123–125 (2013). https://doi.org/10.1038/nphys2575

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