1. General Introduction Flashcards
1
Q
Why are OTC contracts extremely popular for hedging, speculation and arbitrage?
A
Because they are NOT standardised and therefore can be constructed to meet the unique needs of their users
2
Q
What procedure has only recently been established for OTC contracts
A
A central counterparty (CCP) and trade reporting procedure post EMIR to provide greater stability in the derivatives market.
3
Q
How does confidentiality compare between OTC and exchange traded contracts?
A
OTC are confidential that only market participants are aware of the deal, by comparison to exchange traded which are transparent.
4
Q
Is the value of underlying traded greater in OTC or exchange
A
OTC
