The Voice of America
Most new magazines fail. There's some debate about whether the numbers are nine out of 10, or 99 out of a 100, but the statistics are pretty forbidding.

In 1995, the idea of launching an American derivatives magazine seemed like a peculiar kind of folly. The industry was recovering from a disastrous 1994, when an interest rate spike set off derivatives-related explosions at Gibson Greetings and Procter & Gamble, in Orange County, and in a dozen smaller institutions.

The lawsuit that resulted between Bankers Trust and Procter & Gamble—and the widely published telephone tapes of BT salesmen—only confirmed that derivatives were complex financial instruments that could do one thing well: blow up. Mutual funds even took out ads in the Wall Street Journal proclaiming that their portfolios were "derivatives-free.” When I went around to advertisers and investors, I was told: "Derivatives are like junk bonds. They're a passing fad.”

I was convinced, however, that derivatives were on their way to becoming the cornerstone of 21st-century finance. Even then, the largest banks were busily adapting risk management techniques developed for their trading desks to analyze risk across all of their other asset classes. And the analysis of credit risk was still in its infancy.

I also felt there was a dire need for a fresh American voice. The British magazines on the beat seemed more interested in technical articles than in the ideas and people that drove the business. In most cases, they kept their reporters in London and covered the United States as if it were still a foreign colony.

Over the years, there were plenty of missed deadlines, printing snafus and unending battles with the U.S. Postal Service. But month after month, I told reporters we were striving for a high ideal: "To publish a magazine interesting enough to read on the train.”

The landscape has changed dramatically in five years. Derivatives have proved to be more than a financial fad. (Junk bonds haven't done too poorly, either.) Although the field is no longer the font of creativity it once was, derivatives seem to be settling into a responsible adulthood. Derivatives groups, a victim of their own success, are now being integrated into the cash-market desks they once sneered at. On the publishing front, new derivatives magazines have started, and the existing magazines have expanded their U.S. coverage and copied many of our innovations.

In the next five years, the big news will not come from the introduction of new whizbang instruments, but in the way existing products are traded and how they're customized for clients.

Our recent coverage of the e-commerce revolution has demonstrated our commitment to keeping our readers informed about the changes just around the corner. In five years' time, it's likely we'll look back and wonder how we ever managed to trade swaps via the phone and the fax machine.