Handbook of Key Global Financial Markets, Institutions, and Infrastructure

Chapter 45

OTC – Derivative Market

M. Singh

International Monetary Fund, Washington, DC, USA

Outline

The Over-the-Counter Derivatives Market

Introduction

The OTC Derivative Market

Regulatory Infrastructure for OTC Derivatives

Issues Under the Proposed Regulatory Infrastructure for OTC Derivatives

Interoperability of CCPs

Sizable collateral requirements

Unbundling of netted positions

Adverse impact on risk management

Regulatory arbitrage likely

Concentration of systemic risk via ‘risk nodes’

Central Bank backstop (or taxpayer bailout)

Decrease in rehypothecation

Supervision of more SIFIs

An Alternative to the CCP Route: Taxing Derivative Liability Positions

Conclusions

Understanding the CDS Market and the Use of CDS Data

CDS Spreads as a Signaling ...