A key role in financing the economy

Trading floors play a key role in financing the economy and in distributing risk among the various stakeholders. Trading floor professionals have market expertise, and the trading floors are organised to provide customised solutions to the sometimes highly complex problems of bank clients.

The economic role of financial markets
Financing sovereign debt
Key trading floor players


Hedging against foreign exchange risk

Consider a shipbuilder which makes long-term deals to sell goods in foreign currencies. This company runs a significant risk of exchange rate fluctuation. To protect itself, it uses the services of a trading floor.

Bank disintermediation

Due to the Basel 3 regulatory framework, banks have had to reduce the amount of credit they can grant their clients directly. Companies therefore rely more on financial markets, with banks’ role being to help these companies obtain the best financing terms.

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Testimonials


  • Thierry Foucault,

    Professor of finance, HEC Paris

    Companies use the trading floors at banks to protect themselves against the risks incurred by their businesses. The role of these trading floors, much like that of insurers, is to assume these risks, manage them and distribute them among the operators capable of taking them on. The absorption and allocation of risk by trading floors is a virtuous phenomenon without which the economy could not function.

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  • Didier Raffaud,

    Head of fuel purchasing and risk management at Air France-KLM

    Our fuel bill represents just under 30% of our operating costs. To control our production costs, we need to hedge against higher oil prices. A hedging policy cannot really be assessed based on the gains it generates. If a hedge earns money, that's not a good sign: it's almost as if a disaster had occurred!

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Structured products

Structured products are financial instruments that combine at least two elements - usually a bond component and an option component.

Learn more about structured products