{"id":15828,"date":"2014-08-15T09:38:46","date_gmt":"2014-08-15T09:38:46","guid":{"rendered":"https:\/\/wordpress-693215-2610341.cloudwaysapps.com\/index.php\/2014\/08\/15\/dispelling-myths-end-user-activity-in-otc-derivatives\/"},"modified":"2014-08-15T09:38:46","modified_gmt":"2014-08-15T09:38:46","slug":"dispelling-myths-end-user-activity-in-otc-derivatives","status":"publish","type":"post","link":"https:\/\/theotcspace.com\/dispelling-myths-end-user-activity-in-otc-derivatives\/","title":{"rendered":"Dispelling Myths: End-User Activity in OTC Derivatives"},"content":{"rendered":"<p>There is a perception among some commentators that only a small fraction of derivatives activity relates to hedging that benefits the &lsquo;real economy&rsquo;.<\/p>\n<p><!--more--><\/p>\n<p>From ISDA, a long paper on the use of the OTC market by end-users and non-financial organisations.<\/p>\n<blockquote>\n<p>There is a perception among some commentators that only a small fraction of derivatives activity relates to hedging that benefits the &lsquo;real economy&rsquo;. This analysis challenges that assumption. Publicly available data published by the Bank for International Settlements reveals that 65% of over-the-counter interest rate derivatives market turnover involves an end user on one side and a reporting dealer on the other.<\/p>\n<p>These participants, comprising non- dealer financial institutions and non-financial customers, use derivatives primarily to hedge risks and reduce volatility on their balance sheets. The remaining 35% of derivatives turnover activity relates to dealer market-making and the hedging of customer transactions &ndash; vital for market liquidity and the facilitation of client trades. Without this, end users would be unable to put on risk-reducing and cost-effective hedges, potentially leading to less hedging and more balance-sheet volatility.<\/p>\n<\/blockquote>\n<p>The paper is on their page here, or attached below.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There is a perception among some commentators that only a small fraction of derivatives activity relates to hedging that benefits the &lsquo;real economy&rsquo;.<\/p>\n","protected":false},"author":1,"featured_media":15827,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2894,57,2849],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/posts\/15828"}],"collection":[{"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/comments?post=15828"}],"version-history":[{"count":0,"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/posts\/15828\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/theotcspace.com\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/media?parent=15828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/categories?post=15828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/theotcspace.com\/wp-json\/wp\/v2\/tags?post=15828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}