25 January 2012

IOSCO published follow-on analysis to the report on trading of OTC derivatives

There are a number of different types of trading platforms currently available for the execution of OTC derivatives transactions in IOSCO member jurisdictions. These platforms fall into two broad categories: those with multiple liquidity providers (multi-dealer platforms) and those with a single liquidity provider (single-dealer platforms). While these platforms are broadly similar in terms of the function they fulfil, there may be differences in the trade execution models used to effect transactions, the participant coverage, the degree of automation, the scope of asset class or product coverage, and the geographic coverage.

The trade execution models utilised by some multi-dealer platforms are anonymous counterparty models, such as fully-electronic order books, periodic electronic auctions, and hybrid methods that combine elements of both voice and electronic execution, which provide anonymity of counterparties prior to trade execution. Such models are typically used in the inter-dealer market space. Other multi-dealer platforms utilise request-for-quote and click-to-trade execution models that feature full disclosure of counterparties prior to trade execution. The single-dealer platforms utilise the request-for-quote and click-to-trade execution models with full disclosure of counterparties. The full disclosure models are typically used in the dealer-to-client market space. 

Full paper

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