Report Code: A15357 | Pages: NA | Mar 2023 | 1324 Views | ||
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Pandemic disrupted the entire world and affected many industries.
Get detailed COVID-19 impact analysis on the Over-the-counter Derivatives Market
Request Now !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
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:
Questions Answered in the Over-The-Counter Derivative Market Research Report:
Over-the-Counter Derivatives Market Report Highlights
Aspects | Details |
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Key Market Players | UBS Group, Bank of America Corporation, Credit Suisse Group, JPMorgan Chase & Co., Morgan Stanley, Goldman Sachs Group, Inc., DBS Bank, Deutsche Bank AG, Citigroup Inc., Wells Fargo & Company, Axis Capital. |
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