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In the article the instruments for hedging banking risks are examined. The concept of derivative financial instruments as a means of hedging the banking risks is considered. It is determined that on the basis of their circulation derivatives are fallen into exchange-traded derivatives and over-the-counter (OTC) derivatives. The instruments in the stock market and OTC market are analyzed. Advantages and disadvantages of using different types of derivatives are identified.

The Ukrainian derivatives market is considered in the context of prospects of circulating derivatives, which can be used to hedge banking risks. It is discovered that domestic legislative regulation lacks the mechanisms to regulate the derivatives market, and the existing legislation does not cover all aspects of the circulation of derivatives. The development of the legal aspects of the derivatives market regulation in Ukraine is a promising area of scientific research. In the context of development of institutional conditions for effective derivatives market functioning it is necessary to implement new legislation regulations to be realized within the framework of the reform of the stock market of Ukraine. In addition, the currency liberalization is extremely important in the course of integration into the European financial space. This corresponds to the obligations undertaken by Ukraine in the context of the EU-Ukraine Association Agreement. These measures, together with the package of changes in the stock market (capital market), will facilitate the development, especially for companies engaged in financial and investment activities. For the stock market (capital market) in Ukraine this means that participants will have access to the international financial infrastructure and instruments that can be a favourable basis for the development of the mechanisms to hedge risks.

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Keywords:  banking risks; hedging; hedging instruments; derivatives; exchange-traded instruments; over-the-counter (OTC) derivatives; futures; options; forwards; swaps.


Andrii Perevoznyk
postgraduate Banking Management Department SHEI «Kyiv National Economic University named after Vadym Hetman»












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