The term ‘OTC derivative’ is an umbrella term which describes a range of financial products, in each case relating to an underlying or associated financial product. However, and as will be explained subsequently, each OTC derivative product has distinct characteristics which differentiate one OTC derivative product from any other.
OTC derivative products include:
all of which are described to a detailed level in the following chapters.
Other types of OTC derivative product include:
The generic components that are applicable to trades in all types of OTC derivative product include:
Typically, a trade begins with an institutional investor having an exposure, following which an appropriate OTC derivative trade is executed between the investor and an investment bank.
There is no officially defined ...