Finance · Financial Markets
Which of the following statements correctly describe Over-the-Counter (OTC) derivative contracts? Statement 1: OTC derivative contracts are highly standardized contracts listed on formal public exchanges. Statement 2: OTC contracts, like forward foreign exchange contracts, are highly customized based on the precise requirements of the counterparties. Statement 3: Dealers in OTC markets can easily find automated perfect public matches for complex structural hedging instantly. Statement 4: Traditionally, OTC markets have operated with lower direct exchange-style regulatory oversight compared to exchange-traded markets.
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