Validity Issue of Derivative Contracts – Resultant Duties of the Banks

Derivative contracts are highly complicated and risky financial instruments. Historically, they were developed in practice under the mediation of banks to avoid future risks. These days, banks themselves are parties of these contracts, and they are closed for speculative reasons. These contracts eliminate the risk of investors’ mischief. Therefore, the code of conduct to be adhered to by banks must be put on record. Under the existing circumstances, the present paper aims to propose that code of conduct by elaborating on recent discussions and foreign court decisions about derivative contracts. The paper also deals with the terms and terminologies of these contracts