In recent years, there was a divergence between the European and North American markets, the previous one having declined and the last (risk assessment concerning the temporary exclusion of exchange-traded derivatives in MiFIR Articles 35 and 36, MiFIR Sections 35 and 36, 04 April 2016, ESMA/2016/461, p. 7, 8). At the same time, the ongoing implementation of the EMIR clearing obligation on the over-the-counter market has already contributed and will continue to include in central clearing a significant proportion of over-the-counter contracts negotiated over the counter. In accordance with the technical regulatory standards of the AEMF under the EMIR Regulation, the European Commission has already adopted delegated acts for the centralised clearing of the IRS (in EC, GBP, JPY, USD, NOK, PLN and SEK) and the credit index (CDS) in euros, which affects about 70% of the market for OTC derivatives in these categories. It should also be noted that, although the compensation offer is highly concentrated, six central counterparties offer clearing services for the IRS. Exchange-traded derivatives may be options, futures or other financial contracts listed and traded on regulated exchanges such as the Chicago Mercantile Exchange (CME), the International Securities Exchange (ISE), the Intercontinental Exchange (ICE) or the London LIFFE Exchange, to name a few. With regard to fictitious options, options account for 60% of the EDS market and the remaining 40% of futures, a rate widely reflected in Europe and North America. For your convenience, a PDF version of this document is available: ETD_Terms_and_Definitions_USETDA.pdf Reporting Exchange Traded Derivatives under EMIR, Surveying the impact, challenges and recommending a path forward for ETD reporting in 2019, FIA, Juni 2019, fia.org/file/9024/download?token=kDyL15aT Exchange tradedivatives are well suited to small investors, unlike their non-prescription cousins. In the over-the-counter market, it is easy to get lost in the complexity of the instrument and the exact nature of what is being traded. ESMA Annual Statistical Report EU Derivatives Markets 2019, December 9, 2019 ESMA 50-157-20, p. 10, 11 The derivatives exchange itself acts as consideration for any transaction involving a exchange-traded derivative and effectively becomes the seller for each buyer and buyer for each seller.
This eliminates the risk that the counterparty of the derivatives transaction will not meet its obligations exchange traded derivatives are not preferred by large institutions because they are particularly attractive to small investors. For example, standardized contracts cannot be useful for institutions that typically trade large amounts of derivatives because of the lower face value of exchange-traded derivatives and their lack of adjustment. Exchange-traded derivatives are also completely transparent, which can hinder large institutions that generally do not want to make their intentions known to the public or their competitors. Institutional investors typically work directly with issuers and investment banks to create tailored investments that give them the precise risk and reward profile they are looking for. A B C D E F G H I J L M N O P Q R T U V W X Y Z The Commission takes note of the fact that (i) interest rate derivatives represent the main share of the ETD market; (ii) MiFIR`s trading commitment could include some interest rate derivatives in the definition of ETDs; (iii) the offset obligation for EMIR already applies to the IRS and (iv) despite the market merger, the interest rate derivatives market is divided among six different central counterparties.