Are Crypto Derivatives Traded OTC?
Yes, a significant portion of the cryptocurrency derivatives market is traded Over-The-Counter (OTC). Large institutional players often prefer OTC desks for large-volume transactions to minimize market impact and ensure better pricing than they might find on public order books.
These trades typically involve bilateral agreements and customized terms for settlement.
Glossar
Cryptocurrency Derivatives
Function ⎊ These financial instruments derive their valuation from an underlying cryptocurrency, enabling sophisticated risk transfer and speculation without direct asset ownership.
Bilateral Agreements
Agreement ⎊ Bilateral Agreements in derivatives trading refer to private contracts established directly between two principal counterparties without the intermediation of a central exchange or clearinghouse.
Customized Terms
Term ⎊ Customized terms refer to the specific, non-standardized parameters negotiated bilaterally between two counterparties in an Over-The-Counter (OTC) derivatives transaction.
OTC Crypto Derivatives
Structure ⎊ OTC crypto derivatives represent privately negotiated agreements for the exchange of cryptocurrency-based risk, differing from standardized exchange-traded contracts through customization and counterparty credit exposure.
Regulatory Efforts
Framework ⎊ The evolving landscape of regulatory efforts concerning cryptocurrency, options trading, and financial derivatives reflects a global shift towards greater oversight and standardization.
Crypto Derivatives
Synthetic Instruments ⎊ Crypto Derivatives are complex financial contracts whose value is derived from an underlying crypto asset, index, or rate, encompassing futures, options, swaps, and perpetual contracts traded on digital asset exchanges.