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Author | : Mr.Jens Nystedt |
Publisher | : International Monetary Fund |
Total Pages | : 49 |
Release | : 2004-04-01 |
Genre | : Business & Economics |
ISBN | : 145184820X |
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Recent regulatory initiatives in the United States have again raised the issue of a 'level regulatory and supervisory playing field' and the degree of competition globally between over-the-counter (OTC) derivatives and organized derivative exchange (ODE) markets. This paper models some important aspects of how an ODE market interrelates with the OTC markets. It analyzes various ways in which an ODE market can respond to competition from the OTC markets and considers whether ODE markets would actually benefit from a more level playing field. Among other factors, such as different transaction costs, different abilities to mitigate credit risk play a significant role in determining the degree of competition between the two types of markets. This implies that a potentially important service ODE markets can provide OTC market participants is to extend clearing services to them. Such services would allow the OTC markets to focus more on providing less competitive contracts/innovations and instead customize its contracts to specific investors' risk preferences and needs.
Author | : Jens Nystedt |
Publisher | : |
Total Pages | : 54 |
Release | : 2004 |
Genre | : Capital market |
ISBN | : |
Download Derivative Market Competition Book in PDF, ePub and Kindle
Author | : Jens Nystedt |
Publisher | : |
Total Pages | : 48 |
Release | : 2008 |
Genre | : |
ISBN | : |
Download Derivative Market Competition Book in PDF, ePub and Kindle
Recent regulatory initiatives in the United States have again raised the issue of a quot;level regulatory and supervisory playing fieldquot; and the degree of competition globally between over-the-counter (OTC) derivatives and organized derivative exchange (ODE) markets. This paper models some important aspects of how an ODE market interrelates with the OTC markets. It analyzes various ways in which an ODE market can respond to competition from the OTC markets and considers whether ODE markets would actually benefit from a more level playing field. Among other factors, such as different transaction costs, different abilities to mitigate credit risk play a significant role in determining the degree of competition between the two types of markets. This implies that a potentially important service ODE markets can provide OTC market participants is to extend clearing services to them. Such services would allow the OTC markets to focus more on providing less competitive contracts/innovations and instead customize its contracts to specific investors` risk preferences and needs.
Author | : Nystedt T. Jens |
Publisher | : |
Total Pages | : |
Release | : |
Genre | : |
ISBN | : |
Download Derivative Market Competition Book in PDF, ePub and Kindle
Author | : Christina Brinkmann |
Publisher | : |
Total Pages | : |
Release | : 2022 |
Genre | : |
ISBN | : |
Download Imperfect Competition in Derivatives Markets Book in PDF, ePub and Kindle
Since the push towards central clearing in derivatives markets after the global financial crisis, an open question has been how the development has affected competition. This paper models imperfect competition between dealers in derivatives markets. Two risk-neutral dealers offer derivatives to risk-averse clients with a hedging need, and compete in price (fee) and quality (default probability). I find that with such two-dimensional competition, for given default probabilities, an equilibrium in prices exists that is preferred by both dealers. In this equilibrium the dealer with the lower default probability makes larger profits - a feature, that can produce market discipline to keep the own default probability low. If a central counterparty (CCP) is introduced as an innovation that removes the quality dimension of the competition, this market force pushing for higher qualities vanishes.
Author | : Barbara Alemanni |
Publisher | : |
Total Pages | : 27 |
Release | : 1999 |
Genre | : |
ISBN | : |
Download The Market for Derivatives Products: Co-operation Vs Competition Book in PDF, ePub and Kindle
Author | : Robert Lynch McDonald |
Publisher | : Addison-Wesley |
Total Pages | : 881 |
Release | : 2003 |
Genre | : Business & Economics |
ISBN | : 9780201729603 |
Download Derivatives Markets Book in PDF, ePub and Kindle
This text for derivatives courses are suitable for advanced undergraduates and both introductory and advanced derivatives courses at the MBA level. The material in derivatives courses is challenging for most students.
Author | : Söhnke M. Bartram |
Publisher | : |
Total Pages | : 26 |
Release | : 2019 |
Genre | : |
ISBN | : |
Download Competition Without Fungibility Book in PDF, ePub and Kindle
In this paper, we compare option contracts from a traditional derivatives exchange to bank-issued options, also referred to as covered warrants. While bank-issued option markets and traditional derivatives exchanges exhibit significant structural differences such as the absence of a central counterparty for bank-issued options, they frequently exist side-by-side, and the empirical evidence shows that there is significant overlap in their product offerings although options are not fungible between the two markets. The empirical analysis indicates that bid-ask spreads in either market are lowered by 1-2% due to competition from the other market, providing evidence that the benefits of competing market structures are available in the absence of fungibility.
Author | : Sean M. O'Connor |
Publisher | : |
Total Pages | : 82 |
Release | : 1993 |
Genre | : Derivative securities |
ISBN | : |
Download The Development of Financial Derivatives Markets Book in PDF, ePub and Kindle
Author | : Hau Harald |
Publisher | : International Monetary Fund |
Total Pages | : 45 |
Release | : 2019-05-07 |
Genre | : Business & Economics |
ISBN | : 1498303773 |
Download Discriminatory Pricing of Over-the-Counter Derivatives Book in PDF, ePub and Kindle
New regulatory data reveal extensive price discrimination against non-financial clients in the FX derivatives market. The client at the 90th percentile pays an effective spread of 0.5%, while the bottom quarter incur transaction costs of less than 0.02%. Consistent with models of search frictions in over-the-counter markets, dealers charge higher spreads to less sophisticated clients. However, price discrimination is eliminated when clients trade through multi-dealer request-for-quote platforms. We also document that dealers extract rents from captive clients and market opacity, but only for contracts negotiated bilaterally with unsophisticated clients.