European Parliament Library

Derivative Market Competition :, OTC Versus Organized Derivative Exchanges, Jens Nystedt

Abstract
Recent regulatory initiatives in the United States have again raised the issue of a 'level regulatory and supervisory playing field' and the degree of competition globally between over-the-counter (OTC) derivatives and organized derivative exchange (ODE) markets. This paper models some important aspects of how an ODE market interrelates with the OTC markets. It analyzes various ways in which an ODE market can respond to competition from the OTC markets and considers whether ODE markets would actually benefit from a more level playing field. Among other factors, such as different transaction costs, different abilities to mitigate credit risk play a significant role in determining the degree of competition between the two types of markets. This implies that a potentially important service ODE markets can provide OTC market participants is to extend clearing services to them. Such services would allow the OTC markets to focus more on providing less competitive contracts/innovations and instead customize its contracts to specific investors' risk preferences and needs
Table Of Contents
""Contents""; ""I. INTRODUCTION""; ""II. LITERATURE OVERVIEW""; ""III. THE MODEL""; ""A. Basic Setup""; ""B. The Markets� Maximization Problems""; ""IV. COMPARATIVE STATICS AND MODEL RESULTS""; ""A. Comparative Statics""; ""B. Additional Model Results""; ""V. ANALYSIS AND POLICY IMPLICATIONS""; ""VI. CONCLUSIONS""; ""REFERENCES""
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (48 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9780145189495

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