The document discusses various derivative instruments traded in foreign exchange markets such as futures, options, and swaps. It analyzes how these instruments work, who uses them (hedgers, speculators, arbitragers), and the differences between OTC and exchange-traded markets. The document also presents a case study of ITC hedging its foreign currency exposure using derivatives like forwards and options. It finds that hedging helps reduce risks and costs compared to not hedging, though derivatives markets are still exposed to fluctuations in expected spot rates.