Chapter 5

Clearing and settlement of derivatives

Abstract

In this chapter we look at derivatives including on and off exchange products, their characteristics and the associated clearing and settlement features.

We will cover futures, options, swaps, FRAs and other key products within these headings as well as derivatives examples in financial products and commodities.

We compare the on and off (OTC) exchange market and look at the different settlement features.

We explore key concepts like initial and variation margin, collateral, periodic settlement, exercise, assignment, tenders and delivery as well as the changes in the regulatory environment for derivatives since 2008.

Keywords

derivatives; OTC; futures; options; swaps; margin; collateral; CCP; ...

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