Subject 2. Exchange-Traded versus Over-the-Counter Derivatives
#cfa #cfa-level-1 #derivatives #los-58-a #reading-58-derivative-markets-and-instruments
Based on the markets where they are created and traded, derivatives can be classified into two groups:
- Exchange-traded derivatives are created, authorized, and traded on a derivatives exchange, an organized facility for trading derivatives.
- They are standardized instruments with respect to certain terms and conditions of contracts.
- They trade in accordance with rules and specifications prescribed by the derivatives exchange and are usually subject to governmental regulation.
- They are guaranteed by the exchange against loss resulting from the default of one of the parties.
- Over-the-counter derivatives are transactions created by any two parties off a derivatives exchange.
- They don't have standardized terms and features. The parties set all of their own terms and conditions.
- Each party assumes the credit risk of the other party.
If you want to change selection, open original toplevel document below and click on "Move attachment"
Summary
| status | not read | | reprioritisations | |
|---|
| last reprioritisation on | | | suggested re-reading day | |
|---|
| started reading on | | | finished reading on | |
|---|
Details