Journal of Securities Operations & Custody Volume 4 Number 2
The limitations of transparency policy in OTC markets and derivatives trading Yener Coçkun Received (in revised form) 7th June, 2011 The Capital Markets Board of Turkey, Eskiçehir Yolu 8.Km No: 156 06530 Ankara, Turkey Tel: +90 312 292 88 24; E-mail:
[email protected]
Yener Co^kun is Senior Specialist in the Financial Intermediaries Department, Capital Markets Board of Turkey (CMB). Yener has onsite and off-site supervision experience of securities firms, and has contributed to several CMB regulation and research-based projects concerning investment advice, portfolio management, repo-reverse repo, risk management/ risk-based disclosure in securities firms, performance measurement and presentation, dividend policies in publicly held firms, OTC markets and derivatives trading and demutualisation. He spent 10 months at Wharton School, University of Pennsylvania, as a visiting scholar in 2002-2003 and is currently a PhD candidate at Ankara University, in the Graduate School of Natural and Applied Sciences, Real Estate Development Department. Yener has held MRICS designation since 2010 and various local professional designations related to capital markets and real estate appraisal. He has published two books and several journal papers on capital markets, real estate and housing finance.
help to improve both efficiency /stability in the marketplace and investor protection. From the financial firm/system-wide risk management perspective, it is argued that more transparency in OTC markets and derivatives trading may iielp to improve firm/system-wide risk management by enhancing self official and market disciplines. In this paper, tiie author aims to analyse the importance and limitations of tiie transparency policy by analysing transparency literature in banking. By using the ideas in banking and the global financial crisis lessons, the author attempts to define limitations of the policy of more transparency in OTC market/derivatives trading. Tlw paper is specifically aimed at analysing the potential problems of OTC market /derivatives trading in the case of sophisticated financial markets, and attempts to provide a brief from an emerging markets' perspective. In the ligiit of tiie literature review and discussions, it is concluded tiiat more transparency in OTC markets and derivatives trading may not necessarily mean a better marketplace, due to clear, inherent limitations of the mechanism.
ABSTRACT
Journ.ll of Securities Operations Si Custody Vol.4 No. 2. pp. 122-l.W © Henr>' Stewart Publications. 175.V1SO2
Afier each financial failure related to Over the Counter (OTC) markets and derivatives trading, one may observe the call of more transparency for market participants. During the global financial crisis, there was a growing expectation of a better disclosure framework for OTC markets and derivatives trading. More specifically, some believe that a better disclosure framework for OTC markets and derivatives may
Keyv\/ords: OTC mari
