Dr. Abdul Jabbar Al Tayeb Highlights the Role of Financial Derivatives in Strengthening the Economy and Price Stability

In a lecture organized as part of the “Legal Insights” program by the Legislation and Legal Opinion Commission, Dr. Abdul Jabbar Ahmed Al Tayeb, Assistant Professor of Public Finance and Economics at the University of Bahrain’s College of Law, emphasized the critical role of financial derivatives in promoting economic growth and market stability.

During his presentation, titled “Financial Derivative Contracts and Their Role in the Economy”, Dr. Al Tayeb explained that derivatives serve as financial instruments enabling the determination of future prices for traded products, thereby creating balance in present and future pricing, enhancing competitiveness, and facilitating trade exchanges. He described derivatives from financial, legal, and accounting perspectives and outlined major types, including options, futures, and forward contracts.

Dr. Al Tayeb also discussed the role of clearinghouses in regulated markets, ensuring margin adjustments in response to market fluctuations, and highlighted the main uses of derivatives: hedging against market risks, achieving price stability, planning competitive pricing, and facilitating rapid gains through speculation without requiring ownership of the underlying asset. He also cautioned about the risks associated with derivatives in unregulated markets, including credit and market risks.