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Can’t you just give me a pill? 



Finance and medicine have much in common. They both pertain to mankind and society. They both require years of study and a long apprenticeship. They both theoretically are, or should be,  involved with the ethics of beneficence. But also with pragmatism, and at times, to a variable degree, with utilitarianism.

Moreover, both medicine and finance are closely correlated, or better should be directly proportional, to responsibility.

The two fields are so connected to human issues of possibility, growth, hope, planning, change, loss and reality testing, that one is always baffled when they so easily become dehumanized.

Finance and medicine have much in common. They are both divided. Profit of the few versus benefit of the many. Bankability versus aid. Public health care versus the private, for profit, use of medical knowledge to benefit the insured. Or, in some countries, the wealthy. 

Finance and Medicine both deal with behaviors.
There are differences though.

Medicine has its “Temples” of knowledge and study, scattered throughout the world. It, also, has its institutionalized  authoritative organizations which, theoretically, and somewhat differently from Finance, have humankind at heart.  Similarly to the world of finance, it has regulatory agencies to oversee its practitioners behaviors.  Medicine also, occasionally, becomes the object of public scandal and resentment, when it is felt to be no longer fulfilling  its oath to never harm. But, in the end, given that individual people are the ultimate recipients of medicine’s care, and that physicians, the deliverers of such care, are also people, the possibility of dialogue, of explanation and hopefully understanding of illness and remedies, exists. Or one would hope.   

On the other hand, the world of finance has “the Market”. A sizable number of attributes can be given to the Market when we need to distance ourselves from it, accuse it of wrong doing, explain it or explain it away, justify it as if dealing with a scoundrel who because of his nature, could not behave in any other way than he did. For that is his nature. It is, indeed, beyond his control. But who controls the scoundrel? The scoundrel, like most scoundrels, can be volatile and bullish, adjectives that for this scoundrel do not have the same meaning as for most of us. Not unlike many humans, the Market can also panic. 

Now, as opposed to fifty years ago, when humans panic they luckily can take a pill to abort or minimize, or at least shorten, the uncomfortable symptoms. And later, should they so wish, they may speak to a professional and try and understand the cause, if any, of their panic. The professional translates medical knowledge into common language. He or she and his panicked patient, become allies. And allies, at least one would hope, should be on the same page. And speak the same language. This gives the panicked person a sense of control, of mastery over his or her destiny. A way out. Or a way in to a better or different approach to life, in order to prevent, or at least predict and manage, future panic.

Here is where the world of Finance and the World of medicine differ. Language.

In spite of the many publications that allow for a complicated taste of Finance and Market Jargon, the language of professionals, of contracts and of a prospectuses, is to the average human what Latin was to the average practicing Catholic in the pre-Vatican II era. Incomprehensible.

Given the recent, very recent, financial debacle, one might wonder if the professionals need to go back to their Latin themselves.

Notwithstanding, language is what separates the two fields. Not because of its clarity or lack of, though. Medicine is replete with mysterious and unpronounceable terms. But medical language, besides its complexity, has a “palpable” component. For in the end, it relates to human experience. It can be reified into a personal narrative. Of course, the consequences of the Market also translate into personal narratives. Gains and losses have a human counterpart of pleasure and pain. But differently from Medicine, empowering a client, allowing him or her to become a “partner” in his or her own financial future, in spite of ongoing attempts to perfect financial literacy assessment tools,is hardly on the horizon of the financial world and mentality, save for isolated and exceptional instances.

And when the Market goes bonkers, a pill just won’t do.

Behavior, mis-behavior and finance

The older investor as victim


The Organization for Economic Cooperation and Development (OECD) estimates that Italy’s over 65 population will grow to such an extent, over the next thirty years, that it will make the country one of the three “oldest” OECD nations, due to the longevity of its population and low birth rate.

The implications for the financial world are manifold, and are, to a sizable degree, already present. These range from issues of necessary financial planning for a long future without profession generated income, to the possibility of elderly investors being the relatively easy victims of less than transparent and scrupulous financial advisors, on the basis, essentially, on the one hand of a diffuse lack of financial knowledge, and on the other, plain and simple, secondary to the physiologic and at times pathologic vulnerability implicit in aging.

The elderly investor becomes, therefore, almost by definition, a vulnerable one.

The complexity of prospectuses and contracts, the actual possibility of superficial ascertainment of real financial knowledge of an investor - of any age for that matter, but for the older one more so - in light of the currently adopted “screening instruments” of experience with financial markets and tools, make for a powerful combination of potential for harm in the hands of those who are entrusted with an elderly’s savings. While clearly the vast majority of financial advisors are honest individuals, the contractual system and the complexity of its language and the quantity of “fine print” leave many loop holes which may easily be utilized by unscrupulous professionals while, incidentally, all too often remaining on the side of legality. Legality however is note synonymous with morality and just because a harmful behavior may not (yet) be legally sanctioned due to the above mentioned loop holes, does not make it morally acceptable, or less shameful. This, particularly in the case of an older investor who not only relies on his/her savings alongside a not always dignified pension, but also in light of the trusting and personal relationship which commonly an understandably develops between older investor and personal advisor. Ignorance of the “contract” is no excuse, to paraphrase. Yet if a contract is complex to the point it implies a not uncommon need for legal advice for its actual understanding, more than for its interpretation, this means, simply, it is too complicated for the average person. And since it is the average person the one who relies on the professional skills of a financial advisor, the responsibility of the advisor becomes not a beneficent one, but an actual obligation, not unlike other professional roles.

The aging process, even in situations of health, carries with it a number of behavioral and “performance” changes that are characterized by a loss of cognitive flexibility, a lessening of fluid intelligence and a loss of the capacity to attend to multiple stimuli at once.It is not with no reason the British Financial Conduct Authority has published information relative to the vulnerability of the older consumer and that ESMA has commented in 2012, already in the context of MiFID I on the fragility of the older investor due, among other things, to his/her less than adequate updating relative to the ongoing developments of financial instruments. If one couples the rapidly developing market tools and regulations with a slowing of cognitive function, which by definition interferes with financial decision making, it is clear to any reasonable professional and lay person alike that this represents a scenario vulnerable to easy misunderstandings on the part of an aged investor as well as to possible financial victimization in the presence of hasty and clever professionals.

It is inconceivable that a finance professional should be knowledgeable of cognitive neurology, yet common sense, intelligence and responsibility should suffice in guiding a professional in his/her assisting and older investor, periodically assessing the client’s skills and understanding of the financial works which pertain to them. The risk of financial elder abuse is high at a global level, as the Australian Network for the Prevention of Elderly Abuse notes. In light of their own definition of financial abuse, as an , it becomes evident that the professional relationship of a financial advisor with his/her client, although not presently considered as such in all countries, does indeed meet criteria of a fiduciary one, with all this entails and should entail.


The Value of the Lands

“Capture enemy fortresses and surrounding land!” This is the invitation to take a role in the “Landgrabber”, a virtual strategy game set in the Middle Ages.

The exhortation actually invites us to reflect upon the reasons why the several agreements on agricultural land that have been signed in some of the poorest areas of the world, in particular since the world food price crisis of 2007-2008, by some have been defined as “landgrabbing” while by others as “land agreements”. Definitions aside, each reflecting a different approach to the matter, what are the most critical issues of the phenomenon and what should be done in order to have a single common global approach to it?


According to “The Land Matrix Analytical Report II: International Land Deals for Agriculture”, a report published by Land Matrix in 2016, around the world 26.7 million hectares of agricultural land have been transferred to foreign investors since year 2000.  This means that foreign investors possess approximately 2 per cent of the arable land worldwide, or roughly the equivalent to the total area covered by the United Kingdom and Slovenia together.

The report shows also that: i) around the world, 1.004 signed land deals exist; ii) for approximately 70 per cent of these deals (710), agricultural activities have been initiated; iii) Africa is the continent most impacted by the phenomenon, with 422 deals covering a total area of 10 million hectares; iv) other heavily impacted regions are Eastern Europe and Southeast Asia; vi) the agreements primarily target areas previously used for agriculture; and that vii) most of the investors are from Malaysia, the United States, Great Britain, Singapore, and Saudi Arabia. Western European investors are involved in 315 land deals covering an area of 7.3 million hectares which makes Western Europe the largest investor region.


Governments, large companies, hedge funds and pension funds are the main investors in land, springs, pastures and woodlands.

Is this “landgrabbing” or is it investment in agriculture land?

For some economists and investors, the entering into agreements on agricultural land is a positive form of agriculture development. For others instead, such land deals are strongly criticised for their speculative nature and negative impact on local communities.

Because for governments, companies and investment funds it has been rather easy to enter into land deals in  developing countries, the part of the community most touched by (or concerned with) the speculative nature of such deals has highlighted that the land remains but the fruits go far away, often into the treasure chests of  developed nations overloaded with pollution at home and anxious to find a solution for surviving on a planet that they have themselves exhausted and that in certain areas  is on sale.

According to a study carried out by the International Institute for Environment and Development (IIED) in some land acquisition agreements, most African nations risk giving foreign investors access to large swaths of land in rushed, secretive and one-sided deals that fail to deliver any real benefits to the local population while creating a new array of social and environmental issues. The IIED has analysed contracts through which investors have leased large areas of land in East, West, Central and Southern Africa for various agricultural activities. The majority of the contracts reviewed appeared to be heavily biased in favour of the investors, granting them long-term access to land at very low costs while requiring little in return from investors in the form of benefits for local people and environmental protection safeguards .

According to Oxfam which conducted major research in the field [also through interviews and evidence obtained by locals in Uganda, Honduras, Peru, South Sudan, Rwanda and Indonesia] in addition to the land acquisition, there is a shameful back-story of human rights violations,  flouting of the principle of free, prior and informed consent of the land users, especially of the indigenous peoples, a lack of transparency in the acquisition contracts and an absence of any evaluation of the acquisitions’ social, economic, environmental and gender related impact.


Land rights issues are fundamental for addressing future problems. It cannot be denied that the long-term nature of the leases, commonly for terms of up to 100 years, means that local communities will be separated from the land for generations. This threatens to eradicate longstanding livelihood strategies and agricultural knowledge. Also, some contracts grant investors priority rights over water, which can have adverse impacts on other water users in times of water shortage. For the lessor, rental fees are often forfeited in exchange for expected benefits such as potential jobs or irrigation and infrastructure development. But some contracts lack enforceable obligations, or fail to provide details about how many and what kind of jobs the investment will create, which means that the lessors in practice cannot be considered in breach of the contract. Some contracts say very little about the social and environmental standards needed to protect local people and the environment, or about the mechanisms to protect local food security.


Over the past years, agribusiness, investment funds and government agencies have been acquiring long-term rights over large areas of land in Africa. In this environment investors habitually ignored local communities’ rights, created increased competition for land and potential for conflicts with the local population. But perhaps the greatest scandal of all is that 80% of the land purchased remains unused in countries that have chronic food shortages. Considering that this trend will presumably increase in the future in  light of climate change, the increasing demand for food, water scarcity and the increase in biofuel production, it is urgent to raise the level of awareness on the matter and discuss it at the international and supranational level to establish a system of international rules regulating the land deals and avert any type of merely speculative land grab.

Small farmers are still, as they always have been, very vulnerable to the power of land owners and to the power of governments, large corporations and speculative investors. The rural poor should be educated on their rights concerning land access. This is particularly true for women and children who are often the most marginalized and therefore particularly vulnerable to being forced off their land.

Local people, local governments, local and international NGOs and any other civil society organizations should join together to support policies, laws and structures to be put in place to ensure fair and equitable access to land, to bring knowledge of laws and policies to the communities, and facilitate communal understanding of rights, roles, responsibilities and changes taking place in land ownership. The third sector and the investors should work together to help governments and policy makers understand both people and land rights, and  help design solutions and implementation strategies beneficial to the planet.

Execute fortresses of fair(y) land deals !

This is the invitation that should circulate around the world for sustainable agriculture whose only objective should be the improvement of the quality of life of all.

SCS - 2018

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The underlying value of land...

Agricultural Commodity Derivatives


The systemic instability of agricultural markets has always been a key factor in agricultural policies. In comparison to what happens in other sectors of  economy, the biological nature of agricultural production processes and their strong dependency on natural and climatic conditions imply a higher degree of uncertainty over the economic performance of farms and similar agricultural enterprises.

Uncertain factors strongly influence both agricultural productivity and supply. Over the period 2002-2018, international agricultural prices doubled and historical peaks were reached in mid-2008.

After decades of real terms decreases in food prices in Europe and worldwide, the recent volatility generated several debates about the impact of both frequency and volume of price changes in the agricultural sector.

According to some economists the volatility phenomenon in the current global era can be explained by multiple elements affecting both supply and demand.

While short-term volatility is influenced by many factors, such as droughts, floods, variable temperatures, and policy responses such as governments in major agricultural regions banning exports, it also seems that the more structural issue of supply drives long-term volatility.

Such factors increase the risk of disruptions to supply and, at the same time, make supply even more static.  If supply becomes more and more unresponsive to demand, even small changes in that demand can result in significant changes in prices.

It is interesting to note also that the prices of different commodities have been more and more tightly correlated over the past three decades.  The rapid growth in demand for resources (energy, metals, agricultural products) from China and other emerging economies proves it well.  The consolidation of a resource/commodities global system and the stronger interdependence between the prices of agricultural products and energy prices is undeniable.  It is clear that higher energy prices affect food markets as they increase, for instance, the costs of processing and transport.

As a result, shocks in one of the commodities system such as energy today can spread rapidly to other parts of the resource system such as agriculture.  It is in this very context that the financial speculation in commodity derivatives markets has been seen as one of the drivers of the peaks in agricultural prices starting in 2007/2008.  It is difficult to say if this is really so and, if it is, to what extent.  To reflect upon the matter it is key to go through the characteristics of investments in exchange traded agricultural commodity derivatives.  However, before doing so, it is necessary to identify the main characteristics of derivatives and, more in particular, of exchange traded commodity derivatives.


So the first question is: what is a derivative?

 A derivative is a contract between two or more parties. The value of the contract is based on an agreed-upon underlying asset.

 Consequently, the performance, characteristics and value of a derivative contract depend upon, or are derived from, the performance, characteristics and value of an underlying asset, which can be real or financial: typically stocks, bonds, commodities, currencies, indexes or interest rates.

 The value of the derivative is dependent on the changes in the absolute or relative value of the underlying asset.

 Actually, derivatives have been, and still are, criticized for being extremely risky financial products. As known, they have been described as true “weapons of mass destruction”, by Warren Buffet back in 2003.  Probably the bad fame is due to the fact that derivatives build in a systemic risk as a limited number of entities, usually having extensive relationship with one another, can build up a strong interest in certain assets.  Consequently, if an adverse event occurs in one of these entities, it can lead to a cascade effect and a chain of adverse events that may well interrupt the sound functioning of the global financial system. This, in some way, is what happened when the Lehman Brothers Bank collapsed in 2008 and this is the reason why since then the derivative market went under more severe regulation.

The first important distinction to be made in the “land of derivatives” is between the exchange traded derivatives and the over-the-counter (OTC) derivatives.

Exchange traded derivatives are contracts that are traded via exchanges.  A derivatives Exchange acts as an intermediary to all related transactions, and demands a deposit from both sides of the trade to act as a guarantee to potential credit risks.  Exchange traded derivatives are always regulated by national supervisors protecting participants against manipulation, abusive trade practices and fraud.  Having said that, private contracts traded off-exchange, the so called OTC transactions, represent the 85% of all derivative transactions.

 Given the evident riskier nature of OTC derivatives, the current rules governing OTC transactions in the EU, namely the European Market Infrastructure Regulation (EMIR), require that standardized OTC derivatives are cleared through a Central Counterparty in the European Union in an effort to increase transparency and to reduce operational risk in the OTC derivatives market, which was identified as a contributing factor to the financial crisis.


There are four basic type of derivatives: Forwards, Futures, Options and Swaps.



Forwards Contracts are the simplest, as well as the oldest, form of derivatives available today.

A forwards contract is an agreement to sell something at a future date.  The price at which this transaction will take place is decided in the present.

It should be noted that a forwards contract is a private agreement between the parties.  The details of the forwards contracts are privileged information for both the parties involved and that do not have any drive to disclose this information to the public.  Forwards are not traded on a centralized exchange and, therefore, are regarded OTC instruments.  Consequently, there is an increase chance of counterparty credit risk.  Actually, while their OTC nature makes it easier to customize terms, the lack of a centralized clearinghouse also gives rise to a higher degree of default risk.  As a result, Forward Contracts are not easily available to retail investors.



Futures Contracts are very similar to Forwards Contracts.  The similarity lies in the fact that futures contracts also provide for the sale/purchase of an asset at a future date and at a price which is decided in the present. The asset is usually a physical commodity.  Most contracts are paid off before the delivery date. Contrary to Forwards Contract, Futures Contracts are traded on a centralized exchange.  These contracts are of a standard nature and the agreement cannot be modified by the participants.  As any other exchange contracts, they are drafted in a pre-decided format, pre-decided sizes and have pre-decided expiration dates.  Considering that these contracts are traded on Exchanges they have to follow a daily settlement procedure meaning that any gains or losses realized on the contract on a given day have to be settled on that very day.  This avoids the counterparty credit risk.

It should be noted that in case of Futures Contracts, the buyer and seller do not enter into an agreement with one another.  Conversely both of them enter into an agreement with the Exchange.


Options are different from Futures and Forwards where the parties are bound by the contract to exercise an obligation (buy or sell) at a certain date.  Options are asymmetrical as one party is bound whereas it lets the other party decide at a later date i.e. at the expiration of the option.  So, one party has the obligation to buy or sell at a later date whereas the other party can make a choice, having the right and not the obligation to buy or sell a specific amount of commodity, currency, stock, index or debt at an agreed upon price within a certain period of time.  The agreed price is called the Strike Price.  The party that makes a choice has to pay a premium for the privilege.

There are two types of options, ie: Call Options and Put Options.  Call Options allow the right but not the obligation to buy something at a later date at a given price.  Put Options give the right but not the obligation to sell something at a later date at a given pre-decided price.  Like Futures Contracts, Options are also traded on recognized Exchanges.  The most widely used type of Options are the stock options.



Swaps are probably the most complicated derivatives in the market.  Swaps enable the participants to exchange one asset for a similar one. For instance, at a later date, one party may switch an uncertain cash flow for a certain one.  The most common example is swapping a fixed interest rate for a floating one. Participants may decide to swap the interest rates or the underlying currency as well.

Swap contracts are usually not traded on the Exchange.  These are private contracts which are negotiated between two parties.  The purpose is to lower risk for both parties.

Swaps can be conducted directly by two parties, or through a third party such as a bank or a broker.  The writer of the swap, such as the bank or broker, may elect to assume the risk itself, or manage its own market exposure on an exchange. Swap transactions include "price swaps for commodities", "currency swaps" and, as mentioned above, "interest rate swaps".

In a typical "price swap commodity", parties exchange payments based on changes in the price of a commodity or a market index, while fixing the price they effectively pay for the physical commodity. These are OTC instruments.  The most –sadly- famous of these swaps are the "credit default swaps" (CDS) which caused the 2008 financial crisis.

Through CDS investors aim at protecting themselves in case of future defaults. For this protection the protection buyer pays a premium to the seller of the CDS and the seller is obliged to make a payment in the event of a default by the "protected investor".  Consequently CDS are used to transfer credit risks.


If the above are the four basic types of derivatives, modern derivative contracts include countless combinations of the four basic types and result in the creation of extremely complex contracts.


Now that the main features of derivatives have been outlined, it should be easier to focus on the specifics of commodity derivatives and of agricultural products commodity derivatives more in particular.

 Commodity Derivatives are contracts whose value is based on, or derived from, the price movement of a commodity such as oil, metals, agricultural products, minerals, etc.  Other assets such as freight rates, emissions trading credits, and even weather conditions, can also be used as underlying in commodity derivatives.  Like any type of derivatives, commodity derivatives comprise the four basic derivatives and, therefore, there exist commodity futures/forwards, commodity options, commodity swaps.  The most important type of commodity derivatives are Futures Contracts.  These are traded on Exchanges.

 Commodity derivatives market provides hedging tools for companies whose business depends on a specific commodity.  For example, airlines hedge their operations against fluctuations in fuel prices, mining corporations hedge against declines in metal values and utilities like power companies hedge against rises in the price of natural gas, pasta industries hedge against rises in the price of durum wheat.

It should be now clear that an agricultural commodity derivative is a commodity derivative which has an agricultural product as underlying asset.  Unlike financial assets, agricultural commodities are valued based on their future expected spot prices rather than future expected cash flows.  For example, the value of Futures Contracts on wheat is based mainly on expected future spot prices of wheat and the storage costs of holding the wheat.  Furthermore, seasonality affects commodity prices as there arises a mismatch between production by harvest and consumption in an industrial process. 


There are approximately twenty major derivatives Exchanges around the world that trade different agricultural commodities.


In the United States the two major markets are the Chicago Board of Trade for the standard reference prices of soybeans, corn and soft wheat and the Kansas City Board of Trade, for hard wheat. Both markets are now part of the Chicago Mercantile Exchange Group.

In the European Union, the main markets are Euronext Paris and London International Financial Futures and Options Exchange, both part of the NYSE Euronext Group. Paris is today the most important exchange for rapeseed. It has become increasingly important as a pricing basis market for wheat related to Russian and Ukrainian deliveries.  The Italian Stock Exchange, which is part of the London Stock Exchange, created a specific agricultural commodity derivatives segment, named AGREX which is the exchange market for durum wheat futures.

 In Asia the most relevant agricultural derivative markets are the Kansai Commodities Exchange, for rice and the Tokyo Commodity Exchange for soybeans, corn, azuki beans, raw sugar in Japan; the National Commodity & Derivatives Exchange Limited in India, the Dalian Commodity Exchange and the Zhengzhou Commodity Exchange in China, the Agricultural Futures Exchange of Thailand for white rice; and the Singapore Exchange for crude palm oil.


Other significant exchange markets for some agricultural commodities are: the Australian Securities Exchange, mainly for wheat; the South African Futures Exchange - Johannesburg Stock Exchange, of particular relevance for white maize futures price; and the Brazilian Mercantile and Futures Exchange Bovespa.


There is no doubt that investments in agricultural commodity markets have grown at an astonishing rate in recent years.  Conflicting opinions contribute to the debate on the impact of speculative investment in agricultural derivatives on the prices of the agricultural products.

In the view of some economists, investors simply respond to the more fundamental changes in supply and demand conditions in commodity global markets.  They also provide greater liquidity to the markets in ways that increases their efficiency.

 Other analysts argue that excessive speculation drives price volatility and remark that often bilateral relationships exist between price volatility and speculation, even if the linkages are not always overlapping for all the considered commodities, for example, rice or soybeans.

 Nowadays financial institutions, treasurers, investment funds and portfolio managers, industrial corporations and manufacturers directly or indirectly deal in agriculture commodity derivatives.  If we take a closer look at Durum Wheat Futures for example, we might support the vision that agriculture commodity derivatives transactions, when not exclusively speculative, are beneficial for all the different parties involved.

Durum wheat is primarily used to produce pasta in Europe and couscous in North Africa and the Middle East.  Supply variations can create extreme price volatility for durum wheat.  Durum Wheat Futures allow operators within the industry to mitigate risk by hedging their positions, promoting better business planning and greater operational profitability, whilst increasing price transparency.  In addition, they give companies in the agricultural commodities sector the opportunity to hedge their price risk.

 Such contracts are settled by physical delivery of the underlying durum wheat at authorized silos.  In order to admit companies to trading, the Exchange verifies that such companies fulfil certain specific participation requirements.


It is clear that each participant in the market of Durum Wheat Futures has specific objectives and such derivatives allow these diverse objectives to be met.  In particular, for wheat producers: futures can be used as a method for pricing crops that are yet to be produced, limiting exposure to adverse price movements and allowing operators to focus on production management.  For millers and food companies Durum Wheat Futures can be a useful risk management tool that helps to stabilize costs, allowing companies to fix future margins.  For financial players and traders: the market enables them benefit from exposure to investment opportunities in the agricultural industry without the need for a direct link to farming or food production.


Whether one supports or criticizes the use of agriculture commodity derivatives, the value underlying the land of derivatives remains unquestionable.



Useful Glossary in the Land of Derivatives:


Central-Counter-Party (CCP): an entity that interposes itself between the counterparties to the contracts traded in one or more financial markets, becoming the buyer to every seller and the seller to every buyer.


Clearing: means the procedure under which the "clearing house" becomes the buyer to each seller of a futures contract, and the seller to each buyer, and assumes responsibility for protecting buyers and sellers from financial loss by ensuring buyer and seller performance on each contract.


Clearing House: an administrative body of a market that guarantees the settlement of contracts.  It

becomes the counter party to the buyer and the seller of a contract when a trade has been matched, greatly reducing counterparty risk (see CCP).  It also makes sure that underlying financial instruments or commodities are actually delivered to fulfill futures contracts, and maintaining margin accounts.


Exchange: a central marketplace with established rules and regulations where buyers and sellers meet to trade futures and options.  The role of the exchange is important in providing a safer trade.  The contracts go through the exchange's Clearing House, which technically buys and sells all contracts.  The importance of having an exchange is that the contracts will be executed, instead of having to rely upon a trader on the trading floor or electronic trading platforms.  


High Frequency Trading (HFT): a trading programme that uses powerful computers to transact a large number of orders at extremely fast speeds.  High-frequency trading often uses complex algorithms to analyze multiple markets and execute orders based on market conditions.


Position limit (trading limit): a pre-defined limit on the amount, or the maximum number, of derivatives contracts that a (legal) person, or a class of traders, can enter into or hold in one particular underlying security (e.g. hard red winter wheat futures) at a particular moment.  Position limits can be designed by the exchanges on which the derivatives are traded, or by regulators and/or supervisors, and enforced by exchanges and/or supervisors. They aim at preventing excessive speculation and price instability.


Spread Price: the difference between the lowest offers price and highest bid price on the secondary market.


Strike Price: means the price at which the Futures Contract underlying the options contract will be assigned upon exercise of the option.  For options contracts which are exercised into multiple futures contracts, the strike price represents the spread price differential between the futures contracts.


Trade Repositories: the entities that centrally collect and maintain the records of trading of

OTC derivatives.  These electronic platforms act as recognized registries of key information regarding open OTC derivatives trades.  Their purpose is to provide an effective tool for mitigating the opacity of OTC derivatives markets.


Trading: means any purchase or sale of any commodity futures or options contract made on the Exchange.


SCS - 2019

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Mark T. Palermo - The Law Art and Behavior Foundation
From social deviance to art:  Vandalism, illicit dumping and the transformation of matter and form.
Social Sciences, 2019
Special Issue on Green Criminology - Bill McClanahan and Avi Brisman, Editors



Public Events

Past and Upcoming

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Mark Palermo  - The Catch of the Day - P
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World Psychiatric Association - WPA - World Congress

Lisbon, Portugal

August 21-24 

Symposium - Art and Psychiatry Section

Mark Palermo

"Dream Hunter and Reality Gatherer:  Shared Pains and Common Grounds of Art and Psychiatry"

Non-representational assemblage art made with found discarded matter is presented to analyze the ways in which art and psychiatry share a common ground as it pertains to perception and categorization of reality and as it regards the encounter with otherness. Psychiatry can be simply defined as the branch of medicine which deals with anomalies of mental life. Art escapes such a straightforward definition. Or so we are told by those who tell us what art “is”. Both deal with perception and entail transformation (the metamorphosis of  matter or the renewal of a life-story). Epistemologically, Art and Psychiatry share the intrinsic problem of a chronically debatable theory of knowledge and the commonality of dealing with a fluid, opinion- and theory-based “truth”, be this aesthetic or mental, depending on the area of inquiry. Both also share an aspect of commercialization and an ever-changing market.

Language for both is crucial for expressing and understanding. But it also is a frame and as such it contains or labels. Both owe much to silence, to time and to solitude. The two imply an encounter, a confrontation, between one’s self and otherness, be the latter a material object or a person. Art, as a metaphor of self-awareness and self-study, can be used to circumvent inattention to ourselves and to the world and, as “artisans of our lives”, it can underscore our intrinsic capacity for shaping our existence.

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