European reforms will force the OTC and exchange-traded markets together
Viewing regulatory initiatives in
isolation is no longer an option, as it poses the risk of
missing key inter-relationships and greater regulator
cooperation, as well as potentially increasing the cost of
compliance and failing to identify profitable business
opportunities. Paul Gibson, Kimon Mikroulis and Cian Ó
Braonáin of Sapient Global Markets discuss how firms can
start thinking about their business models to exploit the
synergies arising from the significant overlap across
The post-MiFID II
landscape has wide-ranging implications for both the sell side
and the end users of derivative transactions. The trading
convention differences between exchange-traded and OTC
derivatives are diminishing, as OTC derivatives are moving from
a predominantly bilateral model to a more transparent cleared
model. In light of the electronification of OTC markets and
their convergence with exchange-traded derivatives (ETDs), a
consolidation of ETD and OTC derivative infrastructures and
trading behavior is likely, as they will be traded on similar
exchanges and follow similar processes.
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