OTC Derivatives - A Primer on Market Infrastructure and Regulatory Policy

November 27th, 2014
in econ_news

from the Chicago Fed

Derivatives have long been important tools for managing risk. In particular, as Culp (2004) explains, "derivatives can be used as a means of engaging in risk transfer, or the shifting of risk to another firm from the firm whose business creates a natural exposure to that risk" (p. xiv). In this article, we discuss some recent developments relating to the regulation of derivatives markets, specifically the Group of Twenty (G-20) mandates, and examine the infrastructure that supports derivatives markets (including both the trade execution and posttrade clearing and settlement processes).

Follow up:

Then we identify some of the policy issues raised by the G-20 market structure mandates. To provide a foundation for that discussion, first we explain some key concepts and terms.

[click on image below to read the study]

Source: http://www.chicagofed.org/digital_assets/publications/economic_perspectives/2014/3Q2014_part2_ruffini_steigerwald.pdf

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