This article examines the major differences in the accounting and stock market characteristics of banking organizations that use derivatives relative to those that do not.

Credit derivative contracts offer a new route for managing counterparty exposures. This article discusses two formats of these contracts. The contracts have potential for providing portfolio managers with a cost effective, just-in-time source of liquidity.

Prior to the financial crisis of 2008, the over-the-counter derivatives market was not required to “clear” transactions. This changed with the signing of the new financial reform legislation, the Dodd–Frank Act on July 21, 2010. Going forward, most OTC derivatives will be cleared through a...

Most exchange-traded and some over-the-counter (OTC) derivatives are cleared and settled through clearinghouses that function as central counterparties (CCPs). Most OTC derivatives are settled bilaterally. This article discusses how these alternative mechanisms affect the functioning of...