Development of Financial Derivative Product Index in Stock Exchanges: An Ampirical Analysis of EDAS Method

Abstract

Purpose - The aim of this study is to determine the level of financial derivative product use of world stock markets. In order to realize this determination, a derivative product index was created with the help of 5-year data including the years 2015-2019. Design/methodology/approach - Compound methods were used in index formation. One of these methods, the Evaluation Method Based on the Distance from the Average Solution (EDAS) method was preferred and the financial derivative product usage level of the stock markets was compared with the EDAS method. Futures and options types are used as derivatives indicator. Findings - Swaps and forwards are not traded on organized exchanges. As a result of the research, Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange and CME Group called The Commodity Exchange were determined as the exchanges with the highest use of derivatives. Discussion - In the study, the level of use of financial derivatives was investigated through an index developed. With the developed index, the usage levels of derivatives in the stock markets were determined and the adequacy of the stock markets were analyzed. The results of the analysis provided useful findings for researchers and investors working on the subject.