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RBA Glossary definition for OTC

OTC – over-the-counter

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Central Counterparty Loss Allocation and Transmission of Financial Stress

18 Mar 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
Among the reforms to over-the-counter (OTC) derivative markets since the global financial crisis is a commitment to collateralise counterparty exposures and to clear standardised contracts via central counterparties (CCPs). ... First, rather than using
https://www.rba.gov.au/publications/rdp/2015/2015-02.html

Data and Exposure Analysis

29 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
Of the 41 banks, 16 are widely recognised as forming the ‘core’ of the OTC derivative markets. ... The matrix of bilateral gross notional OTC derivative positions for product-class k is denoted G.
https://www.rba.gov.au/publications/rdp/2015/2015-02/data-exposure-analysis.html

Introduction

11 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
An important step towards meeting this objective is the 2009 commitment by G20 Leaders that ‘all standardized OTC derivative contracts should be … cleared through central counterparties [CCPs]’ (G20 2009). ... The resulting increase in the
https://www.rba.gov.au/publications/rdp/2015/2015-02/introduction.html

Policy Implications

29 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
5.1 Liquidity and Solvency Stress – the Trade-off. Using actual data on banks' OTC derivatives positions, the analysis in this paper confirms the finding in Heath et al (2013) that ... It can also lower the collateral requirements associated with banks'
https://www.rba.gov.au/publications/rdp/2015/2015-02/policy-implications.html

References

11 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
MAGD (Macroeconomic Assessment Group on Derivatives) (2013),. Macroeconomic Impact Assessment of OTC Derivatives Regulatory Reforms. , ... Sidanius C and F Zikes (2012), ‘OTC Derivatives Reform and Collateral Demand Impact’, Bank of England Financial
https://www.rba.gov.au/publications/rdp/2015/2015-02/references.html

Conclusions

11 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
further the implications for the stability of the financial network of introducing central clearing and collateralisation of OTC derivatives trades. ... Finally, the analysis in this paper has taken banks' OTC derivative positions, liquidity holdings and
https://www.rba.gov.au/publications/rdp/2015/2015-02/conclusions.html

Background and Relevant Literature

11 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
The G20-led international initiative to expand the scope of CCP clearing to OTC derivative markets added impetus to these efforts (G20 2009). ... The expansion of CCP clearing to OTC derivative markets, and margining of non-centrally cleared derivative
https://www.rba.gov.au/publications/rdp/2015/2015-02/background-relevant-literature.html

Contagion Analysis

29 Sep 2015 RDP 2015-02
Alexandra Heath, Gerard Kelly and Mark Manning
This is equivalent to assuming that OTC derivative positions are not speculative, but rather are entered into to hedge other balance sheet exposures.
https://www.rba.gov.au/publications/rdp/2015/2015-02/contagion-analysis.html