Risk 25 firms of the future: BlackRock

‘Jury out’ on OTC derivatives

Richard Prager and Supurna VedBrat
Richard Prager and Supurna VedBrat, BlackRock

Over-the-counter derivatives have been a popular way for many buy-side firms to take or hedge risk for more than two decades, but they may be about to lose their appeal. Regulatory reform will impose new capital and liquidity constraints on banks, which will filter through to end-users in the form of higher prices. In addition, the regulatory push to central clearing means contracts will become more standardised and attract a host of new fees. It might mean OTC derivatives are no longer the natu

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