OTC derivatives market regulation and commodity derivatives

Journal article

In the wake of the fi nancial turmoil, over-the-counter (OTC) derivatives have become the focus of attention. Indeed, the market size is gargantuan with a notional volume of USD 630 trillion, and it dwarfs the exchangetraded derivatives that have a notional volume of only USD 65 trillion. To date, a signifi cant part of OTC derivatives trades has been handled by a small number of dealers that are the main counterparties of practically all other market participants. In the eyes of regulators and policy makers, the OTC derivatives’ market size, interconnectedness, limited transparency regarding the counterparty exposures, and market participants’ insuffi cient risk management practices have intensifi ed the impact of the fi nancial crisis and thus are potential sources of heightened volatility and systemic risks. Against this background, the G20 leaders agreed at their Pittsburgh meeting in 2009 to undertake reforms, intending to increase transparency and reduce counterparty risk in the OTC derivatives markets.

Authors: Kaya, O

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Oxford Institute for Energy Studies
• Journal: Oxford Energy Forum
• Issue: 103
• Pages: 13-16
• Publication date: 2015-12-01
• ISSN: 0959-7727
• Keywords: Oxford Energy Forum; OIES