Skip to content

FRM Part I · FRM Exam Part I · Exchanges and OTC Markets

Following the 2007-2009 crisis, G20 leaders agreed to a package of reforms for over-the-counter derivatives markets. Which of the following was a core element of that agreement?

The G20 agreed that standardized OTC derivatives should be traded on exchanges or electronic platforms where appropriate and cleared through central counterparties, with trade reporting to repositories and higher capital for uncleared trades. The aim was to reduce counterparty risk and improve transparency after the crisis.

  1. AStandardized OTC derivatives should be traded on exchanges or electronic platforms where appropriate and cleared through central counterpartiesCorrect
  2. BAll OTC derivatives should be banned for non-financial corporations
  3. CBilateral margining should be eliminated for all derivatives to reduce liquidity demands
  4. DTrade details should be kept confidential between counterparties and not reported to any repository

Explanation

The G20 commitments called for standardized OTC contracts to be traded on exchanges or electronic platforms where appropriate, cleared through CCPs, and reported to trade repositories, with higher capital for non-centrally cleared contracts. The other options contradict these goals: reporting was required, margin was increased rather than eliminated, and no ban on corporate use was imposed.

Did you get it right without looking?

One question tells you little. A timed set on Exchanges and OTC Markets shows your real accuracy, how long you take and where you lose marks.

Practise Exchanges and OTC MarketsFree diagnostic mock

More Exchanges and OTC Markets questions