There are different ways to hedge tail risk, but a popular one is to create a basket of derivatives that will perform poorly during normal market conditions but soar when markets plunge.

有不同的方式来对冲尾部风险，但流行的是创造一篮子的在正常市场条件下表现不佳，但在市场暴跌的时候一飞冲天的衍生品。

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They would also engage in complex derivatives that let clients bet on the direction of financial markets or let them hedge the risk of complicated trading strategies.

他们还搞复合衍生产品，让客户赌金融市场的走向或者对冲复杂化的交易策略的风险。

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The FT explains that this risk is particularly prevalent in over the counter markets, where ETFs, foreign exchange options and a number of commodity derivatives trade.

《金融时报》解释称，这种风险在场外交易市场尤其普遍，而交易所开放式指数基金(etf)、外汇期权和多种大宗商品衍生品的通常进行场外交易。

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In theory, the derivatives markets have strengthened the financial system, by allowing risk to be dispersed away from the banks.

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Using unique alphanumeric identifiers for financial firms would improve OTC derivatives markets, make it easier for regulators to see aggregated risk, and, once systems were changed over, would simplify record keeping, improve operational efficiency for firms and eliminate a lot of reconciliation work, according to a report the BIS issued from the Committee on Payment and Settlement Systems and the Technical Committee of IOSCO.

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During the financial crisis, the credit default swap (CDS) market, a part of the OTC derivatives market, took center stage as difficulties in financial markets began to intensify and the counterparty risk involved in a largely bilaterally cleared market became apparent.

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