According to records, in medieval Greece, merchants signed contracts to purchase agricultural products in the current year but deliver them in the following year. During the year, merchants could also transfer this contract to each other. This event can be considered as an initial concept of "derivative."

DERIVATIVE FINANCIAL INSTRUMENTS
From a financial accounting perspective, in the derivatives industry, we have the phrase "Derivative Financial Instruments."

Definition of derivative financial instruments.
Main types of derivative financial instruments.
The role of the derivative financial market.
Definition of derivative financial instruments.
A derivative financial instrument is a financial instrument whose value depends on an underlying asset that has already been issued. Generally, we can understand a derivative as a contract between two parties to exchange a certain quantity of a physical asset or a financial asset at a predetermined price on a fixed date in the future.

The underlying asset can be a commodity, a foreign currency, a security, or a stock index. If the value of the underlying asset in the contract changes, then the value of the derivative financial instrument also changes.

Main types of derivative financial instruments
There are four common derivative financial instruments: "Forward Contract," "Futures Contract," "Swap Contract," and "Option Contract."

A "Forward Contract" is an agreement to buy or sell an asset at a specific time in the future at a predetermined price today. A forward contract is a type of deferred delivery contract, as opposed to a spot delivery contract.

A "Futures Contract" is an agreement between two parties to buy or sell an asset at a specific time in the future at a predetermined price. Unlike a forward contract, a futures contract is standardized in terms of the underlying asset, the form of payment offset, and the trading deadline through a trading exchange. "Futures Contracts" can also be bought and sold on an exchange.

A "Swap Contract" is an agreement to exchange currencies or a series of cash flows at a specific time in the future, according to certain principles. Swap transactions are created so that buyers and sellers can better control their cash flows. Swap contracts are often used in agreements for periodic payment of interest rates for loans, exchange rates, and foreign credit.

An "Option Contract" is an agreement that allows the holder to buy or sell an asset at a predetermined price on a specific date in the future. The holder has the right, but not the obligation, to exercise this agreement. Option contracts are commonly used for hedging and speculating purposes.

"The role of derivative financial markets.

There are four fundamental roles of derivative financial markets:

Role 1: Derivative markets help manage risk.

Derivative markets help transfer risk from those who are exposed to it and averse to it, to those who are willing to accept it. Participants who seek to profit from such risk are known as speculators.

Role 2: Derivative markets provide price indices.

The prices of commodities formed in derivative markets are an important factor leading the price of underlying assets to future levels. They help businesses to devise pricing policies and assist economists in microeconomic management.

Role 3: Derivative markets facilitate capital market expansion.

Derivative financial instrument markets typically have higher liquidity than the spot markets. The high liquidity of the markets is derived from the ability to leverage the markets, where participants only need to deposit a small sum of money to participate. From there, participants can measure the purchase and sale of "risk and return" for their desired levels.

Role 4: Derivative markets help increase business efficiency.

The loose pricing and low transaction costs in this market create conditions for business activities that are not passive about price discrepancies, or can quickly adjust prices when prices fluctuate in a negative direction."