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Price risk intermediation in the over-the-counter derivatives markets: interpretation of a global survey

Author

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  • Catherine Benadon
  • John Kambhu
  • Frank M. Keane

Abstract

In April 1995, central banks in twenty-six countries conducted a global survey of the financial derivatives markets' size and structure. The authors' analysis of the survey results suggests that at the time of the survey, dealers in the aggregate assumed only small exposures to price risks in meeting end-user demands. In addition, despite the derivatives markets' large size, potential price shocks there would still be appreciably smaller in scale than price shocks in the cash markets. Thus, the overall effect of derivatives markets may be to modify and redistribute exposures to price risks in the financial system, rather than to leverage those exposures.

Suggested Citation

  • Catherine Benadon & John Kambhu & Frank M. Keane, 1996. "Price risk intermediation in the over-the-counter derivatives markets: interpretation of a global survey," Economic Policy Review, Federal Reserve Bank of New York, vol. 2(Apr), pages 1-15.
    • Handle: RePEc:fip:fednep:y:1996:i:apr:p:1-15:n:v.2no.1
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    Cited by:

    1. John Kambhu, 1998. "Dealers' hedging of interest rate options in the U.S. dollar fixed-income market," Economic Policy Review, Federal Reserve Bank of New York, vol. 4(Jun), pages 35-58.
    2. John Kambhu, 1997. "Interest rate options dealers' hedging in the US dollar fixed income market," Research Paper 9719, Federal Reserve Bank of New York.

    More about this item

    Keywords

    Prices; Derivative securities;

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