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http://hdl.handle.net/10419/60977
  
Title:Policy perspectives on OTC derivatives market infrastructure PDF Logo
Authors:Duffie, Darrell
Li, Ada
Lubke, Theo
Issue Date:2010
Series/Report no.:Staff Report, Federal Reserve Bank of New York 424
Abstract:In the wake of the recent financial crisis, over-the-counter (OTC) derivatives have been blamed for increasing systemic risk. Although OTC derivatives were not a central cause of the crisis, the complexity and limited transparency of the market reinforced the potential for excessive risk-taking, as regulators did not have a clear view into how OTC derivatives were being used. We discuss how the New York Fed and other regulators could improve weaknesses in the OTC derivatives market through stronger oversight and better regulatory incentives for infrastructure improvements to reduce counterparty credit risk and bolster market liquidity, efficiency, and transparency. Used responsibly with these reforms, over-the-counter derivatives can provide important risk management and liquidity benefits to the financial system.
Subjects:OTC derivatives
central counterparty
centralized data repository
collateral management
electronic trading platform
exchange
market transparency
regulation
systemic risk
JEL:E61
G01
G10
G18
Document Type:Working Paper
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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