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Alternative Market Briefing

Standardization of OTC will reduce trade version, allow accurate trade models

Wednesday, August 14, 2013

Komfie Manalo, Opalesque Asia:

The upcoming standardization of OTC (over-the-counter) trades over new regulatory regimes, could drastically reduce OTC trade versions from thousands to between 10 and 20 and at the same time allow for more accurate trade models using precise data. That was the consensus amongst hedge fund managers who attended the latest Opalesque 2013 Connecticut Roundtable.

The Opalesque 2013 Connecticut Roundtable was sponsored by Eurex, Investor Analytics and Taussig Capital and took place in June 2013 in the Stamford office of Federal Street Partner.

Damian Handzy, Chief Executive of Investor Analytics, said that from a risk analyst’s perspective, a standardization of OTC trades would reduce the thousands of OTC trades to between 10 and 20 versions. "That is a much more manageable data set. And it allows you to build models, much more robust models that are far more accurate and believable from a risk perspective. The resulting transparency cuts the opportunity for mistakes and misinterpretations of the data, and it greatly improves the modeling of the securities," he said.

But for Damien Zinck, who is in charge of the Buy Side Business Development for Eurex, from an exchang......................

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