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Federal Reserve Bank of Cleveland
Economic Commentary
Reforming the over-the-counter derivatives market: what’s to be gained?
Kent Cherny
Ben R. Craig
Abstract

While derivative financial instruments have made the hedging and exchange of risk more efficient, the recent crisis showed that they also pose a substantial threat to financial stability in times of systemic turmoil. Underlying much of this threat is the lack of transparent reporting in the over-the-counter market for these instruments. This Commentary discusses the advantages of one solution to the transparency proble: moving the settlement or trading of derivatives to exchanges or clearinghouses.


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Kent Cherny & Ben R. Craig, "Reforming the over-the-counter derivatives market: what’s to be gained?" , Federal Reserve Bank of Cleveland, Economic Commentary, issue Jul, 2010.
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Keywords: Derivative securities ; Financial market regulatory reform ; Over-the-counter markets
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