OTC and ETD

 •Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated)
directly between two parties, without going through an exchange or other intermediary. Products
such as swaps, forward rate agreements, exotic options – and other exotic derivatives – are
almost always traded in this way. The OTC derivative market is the largest market for derivatives,
and is largely unregulated with respect to disclosure of information between the parties, since
the OTC market is made up of banks and other highly sophisticated parties, such as hedge funds.
Reporting of OTC amounts is difficult because trades can occur in private, without activity being
visible on any exchange.

•Exchange-traded derivatives (ETD) are those derivatives instruments that are traded via
specialized derivatives exchanges or other exchanges. A derivatives exchange is a market where
individuals trade standardized contracts that have been defined by the exchange. A derivatives
exchange acts as an intermediary to all related transactions, and takes initial margin from both
sides of the trade to act as a guarantee. The world's largest derivatives exchanges  Eurex (which
lists a wide range of European products such as interest rate & index products), and CME
Group