The Introduction consists of three sections. Section I contains preliminary observations concerning various approaches to regulation. It is important to note that some of the features of both the products and the regulatory programs discussed in this Section apply equally to markets other than derivative markets.

Section II contains an analysis of the characteristics of derivative products and of certain particular concerns relative to derivative markets.

The primary areas of regulatory concern relating to derivatives including the recognition of markets and products, financial safety and fairness, to name only a few, are explored and the approaches adopted by different jurisdictions are briefly summarized in Section III.

PART ONE of this report is the "Collated Summary of Responses to Common Framework of Analysis" which contains the specific responses of participating jurisdictions to the common framework of analysis. That framework also constitutes the table of contents of PART ONE. PART TWO is the "Cross Regulatory Summary Chart" which summarizes the responses in PART ONE. ^/

Generally speaking, derivatives ^/ are agreements which specify rights and obligations based on some underlying instrument, investment, currency, product, index, right or service (the "underlying interest"). Such rights and obligations may be a cash settlement, delivery of, or the transfer of rights to the underlying interest. Derivatives do not themselves grant or transfer the underlying interest; the transfer of rights in any underlying interest arises upon maturity or exercise, depending on the type of derivative.

For purposes of this report the term "derivative" is construed to refer to only those products:

(i) in which the market itself is the issuer;
(ii) that are subject to the rules of an exchange; and
(iii) for which a clearing organization is used to settle profits and losses, make deliveries and guarantee cleared trades.