A Journey Through the History of Commodity Derivatives Markets and the Political Economy of (De)Regulation

Abstract

The CENTER FOR DEVELOPMENT RESEARCH (ZEF) was established in 1995 as an international, interdisciplinary research institute at the University of Bonn. Research and teaching at ZEF address political, economic and ecological development problems. ZEF closely cooperates with national and international partners in research and development organizations. For information, see: www.zef.de. ZEF-Discussion Papers on Development Policy are intended to stimulate discussion among researchers, practitioners and policy makers on current and emerging development issues. Each paper has been exposed to an internal discussion within the Center for Development Research (ZEF) and an external review. The papers mostly reflect work in progress. The Editorial Committee of the ZEF-DISCUSSION PAPERS ON DEVELOPMENT POLICY includes Joachim von Braun (Chair), Christian Borgemeister, and Eva Youkhana. Chiara Kofol is the Managing Editor of the series.

Aproximación a la estructura espacial de las transacciones de derivados financieros en el mercado extrabursátil OTC

“…Un marco de mayor control financiero modifica la red espacial de derivados, ya que operaciones reguladas pasan obligatoriamente por mercados bursátiles conocidos y localizados. Por el contrario, las operaciones individuales OTC facilitan la dispersión geográfica de los flujos financieros, que puede determinarse libremente en el contrato firmado entre el gestor y su contraparte, pudiendo favorecer la presencia sobredimensionada de permutas, con el peligro de reproducir una situación similar a la de 2008 (Algieri, 2018).…”

Financialization of Water: Conceptual Analysis of the California Water Crisis

“…When futures markets were developed, the quality of the goods needed to be a component of pricing, as seen in the Dojima Rice Exchange during the Edo period (1,867). The theory is that by tracking the prices both before the development of the exchange and after, it can be shown that the exchange reduced the amount of volatility in the price (Algieri, 2018). In the 1800s, the first commodities market was established in the United States.…”

“…The creation of a grading system and institution where grades could be better guaranteed had a significant impact on the price of the grain. These improvements gave confidence to farmers and investors and started futures trading based on this institutional confidence (Algieri, 2018). Price stabilization took some of the guesswork out of farming, and futures made it possible for farmers to have more predictive revenue streams.…”

“…The financialization of commodities made capital more accessible to farmers. Still, it may also have sparked outsized growth of agri-business and made small to medium-sized farmers more at risk [e.g., volatility similar to that of the Dojima Rice Exchange experiment of 7.20% (Algieri, 2018;Hamori et al, 2001;Shi et al, 2016)]. This conceptual analysis aims to look more closely at the motivating factors for water as a commodity and gathers data from several sources and critiques the findings as well as makes some recommendations for alternate solutions that conserve, control price, and make water accessible to the poor.…”