The revolution starts here

Russian and foreign investors are increasingly using derivatives for both hedging and speculation. But the government's inability to institute structural reform means deals will remain fragmented and offshore for the foreseeable future. Christopher Jeffery reports

When the Russian courts ruled that billions of dollars of currency forwards transactions were illegal during the country’s financial crash in 1998, the non-deliverable derivatives market in Russia effectively closed.

The move was widely viewed as a bail-out option for cash-strapped Russian banks, which, according to Moscow-based securities firm Troika Dialog, were short some $6.5 billion in currency forwards offered as currency hedges for foreign investments in short-dated Russian rouble