Over-the-counter (OTC) derivatives, central clearing and financial stability

Arshadur Rahman ()
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Arshadur Rahman: Bank of England

Bank of England Quarterly Bulletin, 2015, vol. 55, issue 3, 283-294

Abstract: Over-the-counter (OTC) derivatives markets have grown significantly over recent decades, and the United Kingdom is an important international centre for them. These markets facilitate the hedging of risk, but they can also give rise to complex exposures within the financial system. Following the financial crisis, policymakers have promoted reforms to these markets. These include the greater use of central counterparties (CCPs) to ‘centrally clear’ transactions, managing risk within the system. The concentration of risk within CCPs does however highlight other challenges, including the need for supervisory co-operation internationally. Authorities are working to address these issues.

Date: 2015
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