The effectiveness of using derivatives as hedging instruments in conditions of economic instability

Abstract

The development of the derivatives market is an important factor in increasing the efficiency of financial systems and ensuring economic stability. In the world, derivatives are widely used for risk management, but in Ukraine their market is at the initial stage of formation. Insufficient level of legal regulation, limited awareness of business entities and lack of infrastructure support hinder the integration of derivatives into the country’s financial system. Research on these issues is of key importance for the formation of a competitive financial environment in Ukraine in the face of global economic challenges.

The purpose of the article is to analyze the current level of distribution and use of derivatives in Ukraine, assess their economic profitability compared to traditional risk management tools, and develop proposals for improving the regulatory environment, which will contribute to the activation of the derivatives market in the post-war period.

The study uses comparative analysis methods to assess derivatives markets, as well as expert assessment to formulate proposals for improving the regulatory environment.

The results analyzed the current state of the derivatives market in Ukraine, which revealed its underdevelopment compared to world standards. The main problems were identified, including low liquidity, insufficient legal regulation and limited participation of institutional investors. It was established that the economic benefits of using derivatives significantly exceed the advantages of traditional risk management tools due to their flexibility, large-scale hedging and arbitrage capabilities.

The article proposed measures to stimulate the development of the derivatives market in Ukraine, in particular, improving the legislative framework, harmonizing regulation with European standards, creating a modern infrastructure for the functioning of futures markets and training specialists in this field.

The conclusions summarize that the implementation of the proposed initiatives will contribute to the expansion of the use of derivatives in financial practice and will positively affect economic growth and increase the stability of the national economy