Derivatives are financial instruments used to manage exposure to volatile markets.

• A derivative's value is derived from an underlying instrument like commodities, interest rates, indices, or stocks.
• It is a financial contract whose value is linked to the expected future price movements of an underlying asset.
• Derivatives trading has grown significantly, with 46.8 billion futures and options contracts traded globally in 2020.
• Derivative-like instruments date back to Ancient Greece, as seen in the story of Thales and the olive presses.
• Modern futures markets began in Chicago, USA, in 1848, with the trading of forward contracts for agricultural grains through the Chicago Board of Trade (CBOT).
• While early futures contracts were based on agricultural commodities, currency and interest rate futures were introduced in the 1970s.
• The Chicago Mercantile Exchange Group (CME), the world's largest derivatives exchange, launched its first stock index futures (S&P 500 index futures) in 1982.
• In Malaysia, the first futures exchange was the Kuala Lumpur Commodity Exchange (KLCE), established in July 1980.
• The Kuala Lumpur Options and Financial Futures Exchange (KLOFFE) was established in 1995, offering stock index futures on the Kuala Lumpur Composite Index (KLCI).
• KLOFFE also introduced stock index options in May 1996.
• The Malaysia Monetary Exchange (MME), a subsidiary of KLCE, launched three-month KLIBOR interest rate futures.
• All Malaysian exchanges were unified under Bursa Malaysia Derivatives Berhad (BMD) in 2009 after a series of mergers.
• BMD formed a strategic partnership with CME to expand the distribution of Malaysian derivatives offerings globally.