Foundations
Listed and OTC Trading
How exchange-traded and OTC derivatives differ, and how clearing, contract specifications and margin work.
Introductory5 pages
1Listed and OTC
- IntroductoryExchange-Traded vs OTC DerivativesFor exchange-traded derivatives, the exchange sets terms such as the size of one unit; one unit of Nikkei 225 Futures is the Nikkei 225 value multiplied by 1,000 yen.
- IntroductoryCleared vs Bilateral TradesIn a bilateral trade, you may not receive money you are owed if the other party defaults, and you bear credit risk to each of your counterparties.
2How Listed Products Work
- IntroductoryContract Months and Tick SizesNikkei 225 Futures and 10-year JGB Futures have contract months of March, June, September, and December; Nikkei 225 Futures can be traded up to eight years ahead.
- IntroductoryFutures Margin and Daily SettlementFor futures cleared by JSCC, the central counterparty, customers deposit margin by the day after the trade.
- IntroductoryJapanese Exchanges and Listed ProductsOsaka Exchange is a financial instruments exchange licensed under the Financial Instruments and Exchange Act, and it is called a comprehensive exchange because it also handles commodities such as precious metals and agricultural products.