Chapter 29 - Exchange and OTC Markets

29.a: Describe how exchanges can be used to alleviate counterparty risk

29.b: Explain the developments in clearing that reduce risk.

29.c: Describe netting and describe a netting process.

29.d: Describe the implementation of a margining process, as well as explain the determinants of and calculate initial and variation margin requirements 

29.e: Compare exchange-traded and OTC markets and describe their uses

29.f: Identify the classes of derivative securities and explain the risk associated with them.

29.g: Identify risks associated with OTC markets and explain how becomes replenish these risks can be mitigated.

29.h: Describe the role of collateralization in the over-the-counter market and compare it to the margining system.

29.i: Explain the use of special purpose vehicles (SPV) in the OTC derivatives market.

29. Key Points