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A look at the rapidly changing market infrastructure supporting the OTC derivatives markets
Journal of Securities Operations & Custody,
4
(1),
7-16
(2011)
Abstract
Arguably the most important developments in the over-the-counter (OTC) derivatives markets over the last few years are the creation of central trade repositories (TRs) and the introduction of central counterparties (CCPs). Both play an important role in strengthening the core financial infrastructure for OTC derivatives transactions. They contribute to the transparency, the safety and the efficiency of the OTC markets. This paper, after a brief look at the organisation of the derivatives markets, will first discuss the functioning of trade repositories and CCPs and then highlight the risks and benefits that need to be considered when TRs and especially CCPs are introduced. It will also emphasise the importance of strong international standards to ensure the safety and soundness of the clearing and settlement arrangements for OTC derivatives transactions.
Keywords: market infrastructure; central counterparty; trade repository; OTC derivatives markets; clearing and settlement
The full article is available to subscribers to the journal.
Author's Biography
Marc Hollanders was appointed as Special Adviser on Financial Infrastructure at the Bank for International Settlements (BIS) in Basel, Switzerland in October 2007. He contributes to payment and settlement issues as an adviser to Management and as a coordinator of research and policy work within the BIS. He also coordinates the outreach programme for the Committee on Payment and Settlement Systems (CPSS). Previously Marc was Head of the Secretariat of the CPSS, which is based at the BIS. He was co-chair of the Task Force that prepared the report General principles for international remittance services which was published in January 2007.
