Reforming the over-the-counter derivatives market: what’s to be gained?

Kent Cherny and Ben Craig

Economic Commentary, 2010, issue Jul

Abstract: While derivative financial instruments have made the hedging and exchange of risk more efficient, the recent crisis showed that they also pose a substantial threat to financial stability in times of systemic turmoil. Underlying much of this threat is the lack of transparent reporting in the over-the-counter market for these instruments. This Commentary discusses the advantages of one solution to the transparency proble: moving the settlement or trading of derivatives to exchanges or clearinghouses.

Keywords: Derivative securities; Over-the-counter markets; Financial market regulatory reform (search for similar items in EconPapers)
Date: 2010
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