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Editor: In the following article, which comes courtesy of the Derivatives Institute in Montreal, writer Lew Diggs talks with Glenn Gaucher, the senior vice-president of Financial Markets at the Montreal Exchange, about the evolution of the Canadian Derivatives Market.
Not so many years ago, financial derivatives were called "exotic" and "synthetic," and many investors considered them too risky. In the last decade, however, they have multiplied and moved quietly into the financial mainstream. There has been a global wave of growth in derivatives exchanges around the world, including the Montreal Exchange (MX).
This big shift in the financial landscape is still not widely understood. In Canada, especially, derivatives are largely an untold story. Glenn Goucher is one individual who is spreading the word about derivatives to financial professionals and to the broader investing public.
LD: What is the derivatives story?
GG: Briefly, it's the story of the growth of large-scale exchange-traded derivatives markets in which all investors can participate; it's the story of how information technology has opened access paths to the market, with computer terminals replacing traditional trading floors; and it's the story of improved financial and technological literacy. All of which attracts more people-brokers, traders, and individual investors-into the market. In short, we've come a long way from the days when "derivatives" were reserved for large, sophisticated financial institutions trading privately on over-the-counter (OTC) markets.
LD: Why talk to CAs about this story?
GG: We cannot tell the derivatives story alone. We look for partners like securities brokers and other finance...