Enron and the Derivative Market
According to Frank Partnoy’s article: Enron and the Derivatives World, Enron structured itself into a derivative trading firm. A Derivative is defined as a financial security instrument whose payoff is linked to another, previously issued security. Derivatives involve the buying, selling, or transferring of risk. Derivatives can be traded in two ways: through unregulated markets and regulated exchanges. Many of Enron’s success with derivatives focused on the unregulated markets (also known as Over the Counter Markets). Enron collapsed due to […]
