2. FINANCIAL ENGINEERING
• Financial Engineering involves the design,
development and implementation of
innovative financial instruments & processes
and the formulation of creative solutions to
problems in finance.
• 2 key words – INNOVATION and CREATIVITY
3. FINANCIAL ENGINEERING
NEW PRODUCT
• SWAP
• MORTGAGE-BACKED SECURITIES
• ZERO COUPON BOND
• JUNK BOND
REPACKAGE OLD
IDEA
• EXTENSION OF FUTURES TRADING TO NEW COMMODITIES /
FINANCIAL INSTRUMENTS
• SWAP VARIANT
• ULIPS
COMBO OF
PRODUCTS &
PROCESSES
• Online sale of ULIPs
• White ATMs
4. ENVIRONMENTAL FACTORS
• Price Volatility
• Globalization of markets
• Tax asymmetries
• Technological advances
• Regulatory changes
• Increased competition
• Cost of information
• Cost of transacting