Content area
Abstract
Recent finance literature attributes the development of derivative instruments (interest rate futures and stock index futures) to technological advances and improved mathematical models for predicting option prices. The role of social ethics in the acceptance of financial derivatives is explored. The relationship between utilitarian ethical principles and the demise of turn-of-the-century bucket shops is contrasted with modern tolerance of financial derivatives based upon libertarian ethical precepts. A change in social ethics appears to have facilitated the growth in trading in modern financial derivatives. The more tolerant attitude toward financial derivatives reflects the extent of change in society's ethical perspective on the relationship between speculative financial trading and gambling.