Futurisation of the OTC market The world of derivatives, particularly over-the-counter (OTC) derivatives, is in a state of change. Prior to the 2008 financial crisis the derivative world consisted of: the OTC markets which traded bi-lateral, customised swap and…
I recently gave a lecture to the Senior Executive Programme at the London Business School about the way in which the exchanges have evolved over the years. As the audience was non specialist the presentation was intended to cover the…
Tagged with: BATS
, Credit Derivatives
, Dark Pools
, Deutsche Börse
, Electronic Trading
, Exchange Mergers
, Fixed Income
, Nasdaq OMX
Since the financial crisis much thought has gone into how the administration and risk management of OTC derivatives could be improved. Most of the discourse gives the impression that there are only two choices – either the current arrangement, with administration carried out bilaterally between the trading parties or clearing through a multilateral netting central counterparty.
But are the choices really that stark? Are there not additional solutions which would go a long way towards meeting the regulators ultimate objectives but also allow a wider range of OTC contracts to be included?
A centrally administered bilateral clearing arrangement could be such a solution.
In the paper I recently published on the OTC Derivatives Market I said that the US Treasury Secretary Geithner had a strong desire to regulate the entire OTC market. On 14 May the US Treasury published its proposals. These are…
Lynton Jones of Bourse Consult was contracted by the City of London Corporation to report on “Current issues affecting the OTC derivatives Market and its importance to London”. The paper was published today and can be downloaded here.