Eugene (Evgueni) Maftsir is a New Jersey executive who leads Elbron Holdings and provides client-focused solutions in areas such as trade financing, bridge loans, and commodities trading. Among the instruments Eugene Maftsir (Евгений Мафцир) has extensive knowledge of is the derivative.
A type of financial contract, the derivative takes its value from a commodity such as oil or gold, or another underlying asset. The contract binds the buyer to purchasing that asset at a specific price on a set date. Derivatives take many forms and can also be based on stocks, bonds, currencies, and even interest rates, such as the 10-year Treasury note yield.
It is not necessary that the seller is owner of the underlying asset. Rather, the contract can be fulfilled through providing the buyer with the means to acquire the asset at a prevailing price. An additional derivative contract can also be provided that offsets the original derivative’s value. This means that the derivative can be traded much more fluidly than the actual asset.
One beneficial aspect of derivatives is that they decrease corporate risk. This is because they represent a futures contract for delivery of the underlying asset at an agreed-upon price. This predictability means that less cash-on-hand is needed, and more cash-flow reinvestment can take place.
One example is a company entering into a futures contract that ensures delivery of raw materials at an already established price. Fluctuations in exchange rates and interest rates thus present a much smaller risk.
