The network nature of over-the-counter interest rates

Interest rate derivatives markets have enjoyed substantial growth since the late 1990s. This chapter discusses the development of these markets since 2000 and introduces the most popular interest rate derivative instruments. Although forward rate agreements and interest rate swaps are important examples of over-the-counter (OTC) products, futures on interest rates and bonds are innovations of organized exchanges. Both OTC interest rate options and exchange-traded options on interest rate futures are discussed to illustrate an overlapping area of both types of derivatives markets. Participants in debt markets are also exposed to both interest rate and credit risk. To mitigate the latter risk, the OTC fixed income derivatives markets provide credit default swaps (CDSs). As credit derivatives are also a subset of fixed income derivatives, CDSs are discussed further.

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Commodities, Futures, Options, and Swaps, 1970–92

Banks, Exchanges, and Regulators ◽

10.1093/oso/9780199553730.003.0004 ◽

2020 ◽

pp. 57-79

Author(s):

Ranald C. Michie

Keyword(s):

Central Bank ◽

Financial Markets ◽

Exchange Rates ◽

Interest Rates ◽

Futures Contracts ◽

Central Bank Intervention ◽

Over The Counter ◽

Bretton Woods ◽

Futures Options ◽

The Past

One of the most dynamic financial markets to appear after 1970 was the trading of derivatives. Prior to 1970 the fixed nature of both interest rates and exchange rates, because of government controls and central bank intervention, limited the need to cover risks in these areas. With the breakdown of the Bretton Woods system in the early 1970s both interest rates and exchange rates experienced rising volatility, forcing banks to turn to derivatives as one way to coping. Governments of countries also began relaxing the prohibition on the trading of futures contracts that had been introduced in the past as a way of coping with destabilizing speculation. The commodity exchanges responded to these opportunities by devising contracts that allowed users to cover risks in financial markets as had already been done for such products as wheat, copper, and, later, oil. Leading these developments were the Chicago commodity exchanges such as the Chicago Mercantile Exchange but numerous contracts were also traded in the Over-the-Counter (OTC) market, directly between banks or through interdealer brokers.

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Corporate Finance and Monetary Policy

The American Economic Review ◽

10.1257/aer.20161048 ◽

2018 ◽

Vol 108 (4-5) ◽

pp. 1147-1186 ◽

Cited By ~ 13

Author(s):

Guillaume Rocheteau ◽

Randall Wright ◽

Cathy Zhang

Keyword(s):

Interest Rates ◽

Bargaining Power ◽

Trade Credit ◽

Open Market ◽

Firm Characteristics ◽

Over The Counter ◽

Nominal Interest Rates ◽

Investment Opportunities ◽

Bank Funding ◽

Pass Through

We develop a general equilibrium model where entrepreneurs finance random investment opportunities using trade credit, bank-issued assets, or currency. They search for bank funding in over-the-counter markets where loan sizes, interest rates, and down payments are negotiated bilaterally. The theory generates pass-through from nominal interest rates to real lending rates depending on market microstructure, policy, and firm characteristics. Higher banks' bargaining power, for example, raises pass-through but weakens transmission to investment. Interest rate spreads arise from liquidity, regulatory, and intermediation premia and depend on policy described as money growth or open market operations. (JEL E43, E52, G21, G31, G32, L26)

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Derivatives

Capital Markets, Derivatives, and the Law ◽

10.1093/oso/9780190879631.003.0011 ◽

2019 ◽

pp. 157-198

Author(s):

Alan N. Rechtschaffen

Keyword(s):

Interest Rates ◽

Foreign Currency ◽

Credit Derivatives ◽

Counterparty Risk ◽

Treasury Bonds ◽

Over The Counter ◽

Futures Options ◽

Counterparty Credit Risk ◽

Stock Indexes ◽

Versus Exchange

Derivatives provide a means for shifting risk from one party to a counterparty that is more willing or better able to assume that risk. The counterparty's motivation for assuming that risk might be to manage its own risk or to enhance yield (make money). Derivatives transactions may be based on the value of foreign currency, U.S. Treasury bonds, stock indexes, or interest rates. There are four types of derivatives contracts: forwards, futures, swaps, and options. This chapter discusses the following: counterparty credit risk, over-the-counter versus exchange-traded derivatives, shifting risk, types of derivatives, reduction of counterparty risk, suitability as hedging instruments, distinction between forwards and futures, foreign exchange forwards and futures, options, characteristics of swaps, and credit derivatives.

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Acetaminophen: Neonatal hepatotoxicity due to late pregnancy exposure

Proceedings, annual meeting, Electron Microscopy Society of America ◽

10.1017/s0424820100127906 ◽

1987 ◽

Vol 45 ◽

pp. 718-719

Author(s):

G.A. Miranda ◽

M.A. Arroyo ◽

C.A. Lucio ◽

M. Mongeotti ◽

S.S. Poolsawat

Keyword(s):

Low Dose ◽

Fetal Liver ◽

Late Pregnancy ◽

Toxic Chemicals ◽

Control Group ◽

High Dose ◽

Over The Counter ◽

Liver And Kidney ◽

Neonatal Liver ◽

Childbearing Women

Exposure to drugs and toxic chemicals, during late pregnancy, is a common occurrence in childbearing women. Some studies have reported that more than 90% of pregnant women use at least 1 prescription; of this, 60% used more than one. Another study indicated that 80% of the consumed drugs were not prescribed, and of this figure, 95% were “over-the-counter” drugs. Acetaminophen, the safest of all over-the-counter drugs, has been reported to induce fetal liver necrosis in man and animals and to have abortifacient and embryocidal action in mice. This study examines the degree to which acetaminophen affects the neonatal liver and kidney, when a fatty diet is simultaneously fed to the mother during late pregnancy.Timed Swiss Webster female mice were gavaged during late pregnancy (days 16-19) with fat suspended acetaminophen at a high dose, HD = 84.50 mg/kg, and a low dose, LD = 42.25 mg/kg; a control group received fat alone.

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