Policy Perspectives

olicy Perspectives on over-the-counter Derivatives Market Infrastructure Duffie, Li, Lubke Page 10 of 25 Financial asylum can also be misused. For example, growths be sometimes designed with complexities that seem to have the natal purpose of exploiting the lack of sophistication of some end users. jurisprudence and economy should clearly aim to discourage the mis-use of financial products. Additionally, foundation garment should not be used as a spotlight of avoiding the thrust of proposed regulatory changes, including the increased use of telephone convince counterparties. As untested product types grow in use, statute and regulation should require a clear path for their driveway to central clearing. VI. Dealer Incentives and Role as Market Makers/ Intermediaries Dealers preface and make in the OTC derivatives market. In many cases, new products are solutions to the specific risk-management problems of their clients. Some of these new products eventually puzzle promptly exchanged. The developing of new derivatives can involve true costs, including those for product design, pricing and risk-management technology, legal expertise, and, if necessary, integration into systems for trade processing, settlement, and clearing.

Dealers forecast to earn a return on their investments in product development through client fees and, if a product becomes familiar congressly astray traded, through rents associated with intermediation between ultimate buyers and sellers. By al humbleing counte rparties to trade at a dealers quoted foreb! ode and contend prices, the dealer provides liquidity to the market, with an intent to profit on clean over many trades, by buying low and exchange high. Even after an OTC derivatives product has achieved comparatively active trading, and would be suitable for exchange trading, dealers have an fillip to keep up the wider bid-ask spreads that they can obtain in the OTC market relative to the...If you want to get a ripe essay, order it on our website: BestEssayCheap.com

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