Does MTM Apply to Over-the-Counter (OTC) Derivatives? ⎊ Path

Does MTM Apply to Over-the-Counter (OTC) Derivatives?

Traditionally, MTM was not a standard feature of OTC derivatives like forward contracts or swaps, which were bilateral agreements. However, post-financial crisis reforms have mandated that many standardized OTC derivatives must be cleared through a CCP and are therefore subject to MTM.

Non-cleared OTC derivatives still rely on bilateral collateral agreements, which are similar to MTM but less standardized.

What Is the Difference between a Standardized and a Non-Standardized Derivatives Contract?

Do OTC Derivatives Ever Utilize a Central Clearing Mechanism?

Give an Example of a Common Bilateral Derivative That Might Transition to Central Clearing

How Do Regulatory Reforms like Dodd-Frank Affect OTC Collateral Requirements?

How Does MTM in Futures Markets Differ from Its Application in OTC Derivatives?

What Is the Primary Advantage of a Centrally Cleared DVP over a Bilateral OTC DVP?

What Is a Credit Default Swap (CDS) and Is It Centrally Cleared?

How Does the Institutional Use of Over-the-Counter (OTC) Options Differ from Exchange-Traded Options?

Glossar

MTM

Valuation ⎊ Market-to-Market, or MTM, within cryptocurrency derivatives represents the continuous recalculation of the profit or loss on open positions based on real-time market prices, a practice critical for risk management and collateralization.

Over-The-Counter (OTC)

Structure ⎊ This describes trading conducted directly between two parties without going through a centralized exchange order book, typical for large-volume crypto derivatives.