Producers, sellers and buyers of commodities all live with price risk, where prices fluctuate between the time of sale and the time of delivery. Price fluctuation can be particularly dramatic when there are unforeseen market or world events.
To guard against these risks, traders regularly hedge their positions. Where a counterparty defaults, how does the law treat hedging losses and which losses are legally recoverable? Firstly, let us try to simply define hedging.
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