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Equity derivatives traders warm to OTC 

April 15, 2015

Mike Kentz, Reuters

Equity derivatives traders have begun to warm once again to trading over-the-counter - rather than through the regulated exchanges that many flocked to following the chaos of the financial crisis.

Volumes across listed US futures, options and securities lending transactions declined by 6% in March over the previous year, following a 13% decrease in February and a 5% drop in January over 2014 levels, according to data from the Options Clearing Corporation.

The dip represents a puzzling departure from a trend of generally increasing volumes since 2009 - when concerns around counterparty credit following the collapse of Lehman Brothers pushed market participants to transact through central intermediaries in a bid to increase safety.

A host of market factors are driving equity traders back to the shade of OTC markets, not least of which is fading memories of the crisis and increased willingness to stomach counterparty credit risks.

Read more: Reuters

 
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