FN: Race for the OTC derivatives market

07 November 2011

Exchanges, brokers and technology providers are racing to establish electronic commodity trading venues, with up to 30 platforms set to be launched over the next two years, as efforts to benefit from new rules forcing greater transparency over derivatives products gather pace.

Regulators in the US and Europe are to introduce new rules governing over-the-counter derivatives markets, including commodities, in a bid to increase transparency and reduce risk in the wake of the 2008 financial crisis. In Europe, the second iteration of the Markets in Financial Instruments Directive is being expanded to force a wider range of asset classes onto organised trading venues. And in the US, the 2010 Dodd-Frank Act, when fully operational, will impose similar regulations.

Last week, TeraExchange, a US-based OTC derivatives exchange operator, announced it was preparing to launch one of the world’s first central limit order books for OTC-cleared derivatives, including commodities.

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