კონფერენცია

∘ Lela Scholer-Iordanashvili ∘
COMPARATIVE ANALYSES OF DERIVATIVES MARKETS IN DEVELOPING AND DEVELOPED COUNTRIES

Summary

The growth of derivatives turnover in emerging markets remains more rapid than in advanced economies. The largest emerging market derivatives markets are now located in Korea, Brazil and the two Asian financial centers of Hong Kong and Singapore. Only 10% of global derivatives turnover is in contracts denominated in the currency of an emerging market economy (EME), much lower than the share of these economies in global GDP or world trade. Derivatives in EME currencies also tend to be less complex and more likely to be traded outside the home economy than those in advanced economy currencies. Differences persist even if we control for key drivers of derivatives turnover such as the size of the bond market, the openness of the capital account, the amount of foreign trade and the size of external liabilities. Instead, the small size of EME derivatives markets appears to reflect differences in per capita income. Large external asset holdings by residents of a country go hand in hand with lower turnover, perhaps because they are used as a hedge against country risk.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Lela Scholer-Iordanashvili ∘ COMPARATIVE ANALYSES OF DERIVATIVES MARKETS IN DEVELOPING AND DEVELOPED COUNTRIES Summary The growth of derivatives turnover in emerging markets remains more rapid than in advanced economies. The largest emerging market derivatives markets are now located in Korea, Brazil and the two Asian financial centers of Hong Kong and Singapore. Only 10% of global derivatives turnover is in contracts denominated in the currency of an emerging market economy (EME), much lower than the share of these economies in global GDP or world trade. Derivatives in EME currencies also tend to be less complex and more likely to be traded outside the home economy than those in advanced economy currencies. Differences persist even if we control for key drivers of derivatives turnover such as the size of the bond market, the openness of the capital account, the amount of foreign trade and the size of external liabilities. Instead, the small size of EME derivatives markets appears to reflect differences in per capita income. Large external asset holdings by residents of a country go hand in hand with lower turnover, perhaps because they are used as a hedge against country risk.