Future options

Dealers like to describe reform of the over-the-counter derivatives market as an evolutionary step. In fact, it’s an evolutionary leap – a sudden transformation that is creating huge uncertainty about future volumes, profit margins and competition.

At the heart of the reform agenda is a major shift towards central counterparties (CCPs) that will sit in the middle of formerly bilateral trades, using default funds and margin requirements to mitigate the counterparty risks that paralysed the market