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The financial markets have suffered a severe shock from the terrorist attacks on New York and Washington on September 11. Everything that was being planned - from mergers and acquisitions to the launch of cutting-edge derivatives instruments - is now under review, cancelled or postponed.
The watchword now is risk. Already we have witnessed a big switch into the least risk-averse instruments - short-dated government bonds, for the most part. Yet derivatives markets should be beneficiaries of investor behaviour. By their nature they are creatures of risk, volatility and uncertainty.
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