The use of hedging instruments and fees should reduce that somewhat.

Trading in these hedging instruments is also considered a major cause for the market's plunge.

Meanwhile, the purveyors of complex hedging instruments designed to preserve value have seen business boom.

By offering these clients hedging instruments, he said, "we have accounts we were able to encourage to stay in the stock market."

Q. Is there a place for hedging instruments, such as stock-index futures, that investors can use to protect their portfolios against a market drop?

The problems multiply for the newer financial and hedging instruments, many of which do not easily fit into existing statute and case law.

Mrs. Frame-Tunney, 31, sells interest-rate hedging instruments to financial institutions.

You can protect yourself against future rises in interest rates by means of a hedging instrument known as a forward rate agreement, or FRA.

Comparison of the value or cash flows of the hedged item and those of the hedging instrument.

The finance departments of many companies are able to create the financial options appropriate as hedging instruments to protect against adverse price movements in their trading commitments.

While hedging instruments can be expensive, they can easily pay for themselves many times over in periods of increasing fuel costs, such as in the 2000-2005 period.

After observing a set of prices for the underlying and hedging instruments, different but identically calibrated models might produce different prices for the same exotic product.

The discussion is likely to focus on the role of stock index futures or options - hedging instruments that allow investors to trade in a market or industry group without buying individual stocks.

If it has sales invoices in hand for future delivery of a product, a company can then carry currency hedging instruments on its books without having to change their value every quarter to reflect the current market.

The subpoenas relate to a hedging instrument linked to commodity prices, offered by Chase, and a certificate of deposit tied to the price of gold, sold by Wells Fargo, commission officials said.

These include checking and deposit services, overdrafts, term loans, mortgages, international asset financing, leasing, installment credit, debt financing, foreign exchange facilities, interest and exchange rate hedging instruments, executor and trustee services.

The hope, he explained, was that the Treasury would be able to buy back "the odds and ends" - bonds in the less popular maturities - and replace them with bonds that have become more useful as hedging instruments.

"They feel they've been legged over by the major banks and you've seen this in so many scandals, whether it's payment protection insurance that people didn't want or selling options and hedging instruments that people didn't understand.

More recently, Brock, Hommes, and Wagener (2009) have used a model of this type to argue that the introduction of new hedging instruments may destabilize the market, and some papers have suggested that ACE might be a useful methodology for understanding the recent financial crisis.

To be designated and qualify for FAS 133 hedge accounting, a commodity (hedged item) and its hedging instrument must have a correlation ratio between 80% and 125%, and the reporting enterprise must have hedge documentation in place at the inception of the hedge.

Hedging instruments such as swaps, options and financial futures can of course be used by financial institutions to limit risk, but these also contain (often unknown and unlimited) risks of their own - witness the losses of Midland Bank in its interest rate risk hedging in 1990.

In the process, the company has opened huge new profit centers: by building power plants and pipelines in Asia, Europe, Latin America and the United States; trading natural gas and electricity in wholesale markets at home and overseas, and applying its financial expertise to create hedging instruments for the energy industry and other commodity businesses.

This search for a delicate regulatory balance comes out of a perception of both the S.E.C. and the C.F.T.C. that stock index futures, one of the driving forces behind the market's wild swings last week, and other relatively new securities such as stock index options are valuable hedging instruments for investors.