As a hypothetical example, suppose the Nikkei 225 is at 32,000. Nikkei 225 Futures on Osaka Exchange are exchange-traded derivatives, and one unit is the Nikkei 225 value multiplied by 1,000 yen. Which of these could be the amount of a trade in a whole number of units of Nikkei 225 Futures?
Quiz: Listed and OTC
Last reviewed: September 24, 2026
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4 questions to check your understanding of the chapter “Listed and OTC”. Choose an answer and select “Check answer” to see the answer and explanation. You can also open “Answer and explanation” to see the answer first.
Question 1
Answer and explanation
Answer: B
With the Nikkei 225 at 32,000, one unit is 32,000 × 1,000 yen, or 32 million yen. The amount of a trade is a multiple of that unit, so it is a whole-number multiple of 32 million yen, and three units come to 96 million yen.
100 million yen and 50 million yen are not whole-number multiples of 32 million yen, so they cannot be traded in Nikkei 225 Futures. The closest you can get to 100 million yen is 3 units (96 million yen) or 4 units (128 million yen). 50 million yen falls between 1 unit (32 million yen) and 2 units (64 million yen). For OTC derivatives, the parties set the terms themselves, so they can match the amount to their needs, for example with a notional amount of exactly 100 million yen.
9.6 million yen is the amount of 3 units of Nikkei 225 mini, whose multiplier is 100 yen. It does not reach 32 million yen, the size of one unit of Nikkei 225 Futures, and is not a whole-number multiple of it.
Learn more: Exchange-Traded vs OTC Derivatives
Question 2
Which statement about a trade repository for OTC derivatives is correct?
Answer and explanation
Answer: C
A trade repository is a body designated by the Prime Minister to collect and store trade information. The Financial Instruments and Exchange Act requires central counterparties and financial instruments business operators and others to provide information on OTC derivatives trades to trade repositories and others. The Financial Services Agency publishes aggregated figures based on the reported trade information. The 2009 G20 agreement included reporting OTC derivatives to trade repositories, and Japan also introduced trade reporting rules.
Publishing daily prices and trading volume for each contract is what an exchange does for exchange-traded derivatives, which are bought and sold on an exchange. The body that becomes the settlement counterparty to both the seller and the buyer once a trade is made is a different body, whose role differs from that of a body collecting trade information. Even though OTC derivatives are bilateral trades between the parties, information on the trades is reported.
Learn more: Exchange-Traded vs OTC Derivatives
Question 3
As a hypothetical example, suppose that on a given day Bank A pays Bank B 1.2 billion yen, Bank B pays Bank C 900 million yen, and Bank C pays Bank A 500 million yen. All three trades are cleared by the same central counterparty. If each bank pays or receives only its net amount with the central counterparty, what is the total amount moved?
Answer and explanation
Answer: C
When the central counterparty is the counterparty to every bank, trades with different counterparties can be offset against each other. Offsetting in this way to reduce the amount of payments is called netting. Bank A pays 1.2 billion yen and receives 500 million yen, so it pays a net 700 million yen to the central counterparty. Bank B receives 1.2 billion yen and pays 900 million yen, so it receives 300 million yen. Bank C receives 900 million yen and pays 500 million yen, so it receives 400 million yen. The total amount moved is 700 + 300 + 400 million yen, or 1.4 billion yen.
2.6 billion yen is the amount moved in bilateral trades, where each bank pays its counterparty without netting (1.2 billion + 900 million + 500 million). 5.2 billion yen adds up every amount paid and every amount received. That counts each trade twice, once on each side. 700 million yen counts only what Bank A pays the central counterparty. The 300 million yen and 400 million yen that the central counterparty pays Bank B and Bank C are also part of the amount moved.
Learn more: Cleared vs Bilateral Trades
Question 4
Bank A and Bank B, both clearing participants, clear an interest rate swap between them through a central counterparty. If Bank B defaults, which statement about Bank A is correct?
Answer and explanation
Answer: D
In a cleared trade, the central counterparty assumes the parties' obligations, the original trade ceases to exist, and Bank A's counterparty becomes the central counterparty. Even if Bank B defaults, the central counterparty closes out the trades, covers the loss from its resources in a set order, and continues settlement. However, if the defaulted clearing participant's initial margin and clearing fund contribution and the central counterparty's own contribution are not enough, the clearing fund contributions of non-defaulting clearing participants are also used. So Bank A may bear part of the loss through its clearing fund contribution or in other ways.
You would choose "removed entirely" if you assumed that clearing keeps the effects of a default from reaching Bank A. What clearing protects Bank A from is failing to receive the positive market value it would have received from Bank B. Bank A may also bear part of a loss when a clearing participant other than Bank B defaults. The set order of resources is the defaulted participant's resources, then the central counterparty's contribution, then the non-defaulting participants' resources, so Bank A's initial margin is not used first. A claim in bankruptcy or similar proceedings arises when Bank B defaults on a bilateral trade that does not go through a central counterparty.
Learn more: Cleared vs Bilateral Trades