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Research Article Open access CC BY 3.0

Financial Markets and the Privileged Choice of the Uninformed Traders: The Role of Derivatives

Shiraz Ayadi

Journal of Economics, Management and Trade · pp. 1393–1418 · Published 12 May 2014

10.9734/BJEMT/2014/8003

Abstract

In this article, we will shed light on the importance that occupies the derivatives for the best functioning of the financial spot market. These products facilitate the intervention of the informed traders and constitute the privileged choices of these non informed ones that generate a concentration of activities in the derivative market. We will also show the appearance of the volatility in the French financial market. The latter generates a stimulus to the coverage against the risk through the intensive use of the derivatives and consequently to an increase of transactions volumes in the future markets and in the options. These mechanisms invented in the French financial market, encourage the informed investors, and especially these less informed ones to stick to these products in order to be covered against the risks of variability of the CAC40 index.  

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