DERIVATIVE PRODUCT COMPANY DPC

A special-purpose entity created to be a counter-party to financial derivate transactions. A derivative product company will often originate the derivative product to be sold; as well, they may guarantee an existing derivative product or be an intermediary between two other parties in a derivatives transaction.

These companies are involved mainly in credit derivatives, such as credit default swaps, but may also transact in the interest rate, currency and equity derivatives markets. Derivative product companies cater mainly to other businesses that are looking to hedge risks that can include currency fluctuations, interest rate changes and contract defaults.