clearing

Learning Objectives: Define derivatives and explain how derivative transactions create counterparty credit risk. Compare and contrast exchange-traded derivatives and over-the-counter (OTC) derivatives, and discuss the features of their markets. Describe the process of clearing a derivative...

Learning objectives: Describe how exchanges can be used to alleviate counterparty risk. Explain the developments in clearing that reduce risk. Describe netting and describe a netting process ... Describe the role of collateralization in the OTC market and compare it to the margining system...