Discuss how the OTC markets are becoming more like exchange-traded markets as a result of post-crisis...

Discuss how the OTC markets are becoming more like exchange-traded markets as a result of post-crisis regulations. What role do CCPs play and how are they similar to exchange clearing houses? Discuss futures vs. OTC trades and margin requirements.

Solutions

Expert Solution

Over the counter markets are becoming more like exchange traded market as there has been better adoption of rules and regulation after the 2008 crisis and there has been their mechanism of various transactions in order to reduce the counterparty risk along with the reducing liquidity Risk ,so there has been a high level of transparency and better Structure mechanism and hence can we say that the over the counter markets are becoming more exchange-traded Markets and they arer more secure and they are enhancing operations in order to comply with the rules and regulation.

Central counterparty clearing house is enhancing its operation and it is eliminating the liquidity risk along with credit risk in order to lower the counterparty risk which are associated with the over the counter exchange markets.

Margin requirements for over the counter trades are much higher than the margin requirements of the exchange based trade as, they are trying to increase the margin base in order to reduce the credit risk.

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Compare centralized exchanges to OTC markets. In your opinion, why are bonds typically traded on OTC...

Compare centralized exchanges to OTC markets. In your opinion, why are bonds typically traded on OTC markets?

What is a bond and how is it traded in financial markets?

The Global Financial Crisis 12. How big is the OTC market? 13. According to McKinsey, why...

The Global Financial Crisis 12. How big is the OTC market? 13. According to McKinsey, why is our economy recovery so slowly? Who else is in trouble? 14. What does history teach us about deleveraging?

Discuss the Malthus theorem and the likelihood that it will result in world crisis as predicted....

Discuss the Malthus theorem and the likelihood that it will result in world crisis as predicted. Please also include both New Malthusian and Anti-Malthusian points of view.

Globalization is the process of the world becoming more connected. Like any process that involves economic...

Globalization is the process of the world becoming more connected. Like any process that involves economic choices, it has positive and negative consequences. China is one of the world's fastest-growing economies, and it has experienced many consequences as the result of globalization. One severe consequence has been a sharp increase in air pollution. In an informative essay, describe the effects of globalization on air pollution in China's largest cities. Use outside research to gather anecdotes and data to help you...

Compare operations of foreign exchange markets to domestic markets. Explain how foreign exchange rates, economic conditions,...

Compare operations of foreign exchange markets to domestic markets. Explain how foreign exchange rates, economic conditions, and the international business environment affect prices charged in foreign markets. Support your analysis with a current news source, such as electronic local newspapers, New York Times, International Business Times, Economic Times, or CNN News.

Compare operations of foreign exchange markets to domestic markets. Explain how foreign exchange rates, economic conditions,...

In an essay of 3-5 paragraphs discuss the following: As a result of the Covid-19 crisis,...

In an essay of 3-5 paragraphs discuss the following: As a result of the Covid-19 crisis, there have been periodic shortages of medical supplies, personal protective equipment, manufactured goods and food. Specifically identify one of these shortages and discuss a pricing strategy that you believe would help alleviate the shortage in an equitable and efficient manner. Why would your suggested method of pricng work better than what is currently in use?

What were some lessons learned on foreign exchange and derivative markets from the recent financial crisis?...

What were some lessons learned on foreign exchange and derivative markets from the recent financial crisis? What regulations were introduced to prevent future problems? What are some recent developments in domestic and international foreign exchange and derivative markets?

Explain the difference between a mutual fund and an exchange traded fund. Discuss load vs no-load...

Explain the difference between a mutual fund and an exchange traded fund. Discuss load vs no-load funds. How do loads and fees affect investment returns?

Subjects