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A Short History of Derivative Security Markets

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  • Ernst Juerg Weber

    (UWA Business School, The University of Western Australia)

Abstract

Contracts for future delivery of commodities spread from Mesopotamia to Hellenistic Egypt and the Roman world. After the collapse of the Roman Empire, contracts for future delivery continued to be used in the Byzantine Empire in the eastern Mediterranean and they survived in canon law in western Europe. It is likely that Sephardic Jews carried derivative trading from Mesopotamia to Spain during Roman times and the first millennium AD, and, after being expelled from Spain, to the Low Countries in the sixteenth century. Derivative trading on securities spread from Amsterdam to England and France at the turn of the seventeenth to the eighteenth century, and from France to Germany in the early nineteenth century. Circumstantial evidence indicates that bankers and banks were at the forefront of derivative trading during the eighteenth and nineteenth centuries.

Suggested Citation

  • Ernst Juerg Weber, 2008. "A Short History of Derivative Security Markets," Economics Discussion / Working Papers 08-10, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:08-10
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    File URL: https://www.business.uwa.edu.au/school/disciplines/economics/?a=94260
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    References listed on IDEAS

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    1. Geoffrey Poitras (ed.), 2006. "Pioneers of Financial Economics: Volume 1," Books, Edward Elgar Publishing, number 3822.
    2. James T. Moser, 1994. "Origins of the modern exchange clearinghouse: a history of early clearing and settlement methods at futures exchanges," Working Paper Series, Issues in Financial Regulation 94-3, Federal Reserve Bank of Chicago.
    3. Richard S. Dale & Johnnie E. V. Johnson & Leilei Tang, 2005. "Financial markets can go mad: evidence of irrational behaviour during the South Sea Bubble," Economic History Review, Economic History Society, vol. 58(2), pages 233-271, May.
    4. Gary S. Shea, 2005. "Understanding financial derivatives during the South Sea Bubble: the case of the South Sea subscription shares," CDMA Working Paper Series 200512, Centre for Dynamic Macroeconomic Analysis.
    5. Ernst Juerg Weber, 2001. "Central Bank Gold Holdings," Economics Discussion / Working Papers 01-03, The University of Western Australia, Department of Economics.
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    Cited by:

    1. Chambers, David, 2019. "Commodity Option Pricing Efficiency before Black Scholes Merton," CEPR Discussion Papers 13975, C.E.P.R. Discussion Papers.
    2. Lannoo, Karel & Thomadakis, Apostolos, 2020. "Derivatives in Sustainable Finance," ECMI Papers 29791, Centre for European Policy Studies.
    3. Algieri, Bernardina, 2018. "A Journey Through the History of Commodity Derivatives Markets and the Political Economy of (De)Regulation," Discussion Papers 281139, University of Bonn, Center for Development Research (ZEF).
    4. Monika Wieczorek-Kosmala, 2019. "The Concept of Risk Capital and Its Application in Non-Financial Companies: A Sustainable Dimension," Sustainability, MDPI, vol. 11(3), pages 1-20, February.
    5. David Chambers & Rasheed Saleuddin, 2020. "Commodity option pricing efficiency before Black, Scholes, and Merton," Economic History Review, Economic History Society, vol. 73(2), pages 540-564, May.
    6. Tanveer Bagh & Muhammad Asif Khan & Tahir Azad & Shamila Saddique & Muhammad Atif Khan, 2017. "The Corporate Social Responsibility and Firms' Financial Performance: Evidence from Financial Sector of Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 301-308.
    7. Jovanovic, Franck & Schinckus, Christophe, 2017. "Econophysics and Financial Economics: An Emerging Dialogue," OUP Catalogue, Oxford University Press, number 9780190205034.

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