
We need to remember that OTC derivatives typically include swaps,
forward rate agreements (FRAs), options (often referred to as exotic
options because they have special conditions attached to them so we
have, for instance, barrier options which are activated or cease to exist
when a certain price is reached), credit derivatives etc. and in each
case there is no exchange-generated contract specification to deter-
mine the terms of the derivative and the settlement. Understanding
the contract specifications and settlement convention for exchange
traded derivatives is vital and so it is for OTC trades as well except
here the only means of getting that detail ...