How CFOs use derivatives - or not

Our sister publication Treasury & Risk asked its readers, made up of Fortune 1000 chief financial and risk officers, about derivatives usage by their companies. Here's what they said:

1) 79% of respondents use derivatives, up slightly from last year, and up from 63% in 2007.

2) The majority (61%) have used derivatives for more than five years.

3) 45% use more "plain vanilla" products as a result of FAS 133/138. This is up from 31% in 2009.

4) 63% said they price derivatives for FAS 133/138 reporting using quotes from institutions that sell derivatives.

5) The majority said their usage of derivatives will stay about the same. Interest rate derivatives usage might decrease while currency usage would grow.

6) Only 10% believed OTC derivatives were transparent and on-exchange trading of these products would provide no benefit. 46% thought derivatives  were moderately transparent while 26% said they weren't transparent at all.

7) And board or senior management still isn't engaged. Only 55% said management inquired about interest rate derivative usage while 49% questioned foreign exchange usage. How many asked regularly about total risk exposure? 36%.

8) Finally, 47% said they hedge transactions, 32% say they hedge specific currency exposures and 21% say they hedge total risk.

About the Author

In her many years covering the futures industry Ginger has interviewed some of today's best global hedge fund and commodity trading advisors. Ginger received a master's degree in journalism at Northwestern University's Medill School of Journalism and a bachelor’s in communication arts from the University of Wisconsin – Madison

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