1.1 OT Instruments and Transactions

This topic describes the Instruments and Transaction in OT module.

The Options are traded in the over-the-counter market, where the active participants are banks and corporates. Therefore, the deals are inter-bank or between a bank and a corporate. Deals are struck to cover an existing exposure (hedge deals) or to create a speculative exposure (trade deals).

The terms of an OT contract are tailored according to the mutual convenience of the counterparties. The counterparties also carry the complete exposure on each other, with no clearinghouse standing as a guarantor for the deals.