Explanation:
The OTC derivatives market is larger than the exchange-traded derivatives market. However, while post-crisis regulation may affect both markets, it is not certain that it will simply shrink OTC and expand exchange-traded markets; the long-run impact is less clear.
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Question 135.3 Which is the true statement about the size and prospects for the OTC market?
A
The OTC derivatives market is larger than the exchange-traded derivatives market, but post-crisis regulations will surely shrink the size of the OTC market and grow the exchange-traded derivatives market
B
The OTC derivatives market is larger than the exchange-traded derivatives market, and it’s unclear how regulations will impact their respective growth rates
C
The exchange-traded derivatives market is larger than the OTC derivatives market, and post-crisis regulations will surely shrink the size of the OTC market and grow the exchange-traded derivatives market
D
The exchange-traded derivatives market is larger than the OTC derivatives market, and it’s unclear how regulations will impact their respective growth rates