ETP definition

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Trading OTC derivatives on electronic trading platforms

Trading OTC derivatives on electronic trading platforms What does this Practice Note cover? This Practice Note explains the trading of over-the-counter (OTC) derivatives on electronic trading platforms (ETPs) and covers: • the ways in which OTC derivatives may be traded • the reasons for increased trading of OTC derivatives on ETPs • the types of OTC derivatives that can be traded on ETPs, and • the documentation required for trading OTC derivatives on ETPs What are the different methods of trading OTC derivatives? OTC derivatives may be executed through various mechanisms, including: • voice execution • electronic trading platforms (ETPs), and • hybrid systems Voice execution An OTC derivative is a bi-lateral contract. Traditionally, OTC derivatives were negotiated and agreed either directly between the two counterparties, or through a broker, using voice execution, which means using either telephone or internet messaging. By contrast, exchange traded derivatives (ETDs) were, and continue to be, traded only on organised, regulated trading venues. These trading venues are known as futures...

OTC and exchange traded derivatives—key features and concepts

OTC and exchange traded derivatives—key features and concepts What does this Practice Note cover? There are two broad types of derivatives: • over the counter (OTC) derivatives, and • exchange traded derivatives (ETDs) OTC derivatives may be sub-divided into: • non-cleared OTC derivatives, and • cleared OTC derivatives, which have features in common with both non-cleared OTC derivatives and ETDs This Practice Note: • explains some of the key concepts underlying non-cleared OTC derivatives, ETDs and cleared OTC derivatives • describes the key features of the three types of derivatives • explains the reasons for the increasing importance of cleared OTC derivatives, and • explains and compares the three types of derivatives, with focus on: ◦ the parties to each type of derivative ◦ the sub-types of derivatives, or derivative products, which can be entered into in non-cleared OTC, ETD and cleared OTC form, and ◦ the ways in which the three types of derivatives are traded Practice Note: OTC and exchange traded derivatives—documentation further explains and...