Allied Market Research

2024

Over-the-counter Derivatives Market

Over-the-Counter Derivatives Market Size, Share, Competitive Landscape and Trend Analysis Report by Type (Exchange traded derivatives, Semi-annual OTC derivatives, Triennial OTC derivatives) and by Application (Mechanics valuation, Hedging, Speculation, Arbitrage): Global Opportunity Analysis and Industry Forecast, 2023-2032

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Author's: | Vineet Kumar
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Over-the-counter derivatives (OTC) are private financial contracts formed by two or more counterparties. In addition, a derivative is a security whose price is determined by one or more underlying assets. OTC derivatives are traded between two parties without going through an exchange or any other intermediaries. OTC is the term used to refer stocks that are traded via a dealer network and not any centralized exchange. These are also known as unlisted stocks where the securities are traded by broker-dealers through direct negotiations. Derivatives can be classified as over-the-counter or exchange-traded depending on where it is traded.

The global over-the-counter derivatives market is segmented on the basis of type, application, and region. Based on type, the market is divided into Exchange traded derivatives, Semi-annual OTC derivatives, Triennial OTC derivatives. In terms of application, the market is categorized into Mechanics & valuation, Hedging, Speculation, Arbitrage. Geographically, the market is analyzed across several regions such as North America, Europe, Asia-Pacific, and Latin America, Middle East & Africa (LAMEA).

COVID-19 Scenario Analysis

  • In the wake of the COVID-19 situation, the security market has huge uncertainty, which tends to increase market risk, such as the volume in some sectors dropping drastically. Since the outbreak, there have been extreme movements in the equity markets due to market concerns about the knock-on effects of coronavirus on businesses in a range of sectors. There have also been sharp movements in the commodities and foreign exchange markets. The indirect effect of these market dislocations has negatively affected the derivatives markets.

Top Impacting Factors: Market Scenario Analysis, Trends, Drivers, and Impact Analysis

Higher transparency due to the adoption of digitalization in the financial sector and better consumer experience is driving the growth of the market. However, a lack of transparency and legal risks in OTC derivatives markets are expected to hamper market growth. Contrarily, the rise in the use of trading platforms for investments and the rise in participation of security exchanges can be seen as an opportunity for the over-the-counter derivatives market.

The Over-The-Counter Derivatives Market Trends Are as Follows:

Derivatives Trading Provides Protection Against the Risks Associated with the Price Movements:

Derivatives trading can protect against the risks associated with the price movements of the underlying assets. Along with hedging against price movements, derivatives trading also allows trading firms to negotiate better terms of trade. At times, fund managers use derivatives trading to reach the targeted asset allocation in their investment portfolios. Therefore, this is a major growth factor for the over-the-counter derivatives market.

Lack of Transparency:

The price OTC market participants pay for the capability to create modified transactions is illiquidity and a lack of transparency, these two factors are hampering the growth of the market. Furthermore, another major risk in OTC trading is that the market for an OTC-listed stock might be very delicately traded, with enormously large bid-ask spreads that make it very hard to trade beneficially. Thus, these factors are hampering the growth of the counter derivatives market.

Key Benefits of the Report:

  • This study presents an analytical depiction of the over-the-counter derivatives market along with the current trends and future estimations to determine the imminent investment pockets.        
  • The report presents information related to key drivers, restraints, and opportunities along with a detailed analysis of the over-the-counter derivatives market share.     
  • The current market is quantitatively analyzed to highlight the over-the-counter derivatives market growth scenario.             
  • Porter’s five forces analysis illustrates the potency of buyers & suppliers in the market.         
  • The report provides a detailed over-the-counter derivatives market analysis depending on the present and future competitive intensity of the market.

Questions Answered in the Over-The-Counter Derivative Market Research Report:

  • Which are the leading players active in the over-the-counter derivatives market?
  • What would be the detailed impact of COVID-19 on the over-the-counter derivatives market size?
  • What are current trends that would influence the market in the next few years?
  • What are the driving factors, restraints, and opportunities of the over-the-counter derivatives market forecast?

Over-the-Counter Derivatives Market Report Highlights

Aspects Details
Over-the-Counter Derivatives Market By Type
By Type
  • Exchange traded derivatives
  • Semi-annual OTC derivatives
  • Triennial OTC derivatives
Over-the-Counter Derivatives Market By Application
By Application
  • Mechanics & valuation
  • Hedging
  • Speculation
  • Arbitrage
Over-the-Counter Derivatives Market By Region
By Region
  • North America  (U.S., Canada, Mexico)
  • Europe  (UK, Germany, France, Spain, Italy, Rest of Europe)
  • Asia-Pacific  (China, Japan, India, Australia, South Korea, Rest of Asia-Pacific)
  • LAMEA  (Latin America, Middle East, Africa)
Key Market Players
Key Market Players

Citigroup Inc., Deutsche Bank AG, Morgan Stanley, DBS Bank, Wells Fargo & Company, UBS Group, Bank of America Corporation, Credit Suisse Group, Goldman Sachs Group, Inc., JPMorgan Chase & Co., Axis Capital.

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Over-the-Counter Derivatives Market

Global Opportunity Analysis and Industry Forecast, 2023-2032