Good Derivatives (ePub)

Through the eyes of an inventor of new markets, Good
Derivatives: A Story of Financial and Environmental Innovation
tells the story of how financial innovation - a concept that
is misunderstood and under attack - has been a positive force in
the last four decades. If properly designed and regulated, these
"good derivatives" can open vast possibilities to
address a variety of global problems. Filled with provocative
ideas, fascinating stories, and valuable lessons, it will provide
both an insightful interpretation of the last forty years in
capital and environmental markets and a vision of world finance for
the next forty years.

As a young economist at the Chicago Board of Trade, Richard
Sandor helped create interest rate futures, a development that
revolutionized worldwide finance. Later, he pioneered the use of
emissions trading to reduce acid rain, one of the most successful
environmental programs ever. He will provide unique insights into
the process of creating these new financial products. Covering
successes and failures, the story describes the tireless process of
inventing, educating and creating support for these new inventions
in places like Chicago, New York, London, Paris and how it is
unfolding today in Mumbai, Shanghai and Beijing.

The book will tell the story of the creation of the Chicago
Climate Exchange and its affiliated exchanges (European Climate
Exchange, Chicago Climate Futures Exchange and Tianjin Climate
Exchange, located in China). The lessons learned in these markets
can play a critical role in effectively addressing global climate
change and other pressing environmental issues. The author argues
that market-based trading systems are a far more effective means of
reducing pollutants than "command-and-control".
Environmental markets may ultimately help to find solutions to
issues such as rainforest destruction, water problems and
biodiversity threats.

Written in an engaging, narrative style, Good Derivatives
will be of interest to both practitioners and general readers who
want to better understand the creative process of financial
innovation. In the middle of so much distrust of markets, it is
also a recipe of how transparent, well-regulated markets can be a
force for good in the environmental, health, and social areas.