About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Lack of Standard IDs Constrains OTC Equity Derivatives Growth

Subscribe to our newsletter

Where do we go from here? This is the question posed in a recent paper from analyst Aite Group, exploring trends in OTC equity derivatives. OTC equity derivative growth has been steadily increasing – the market grew by a year over year rate of 32 per cent as of June 2006, according to the International Swaps and Derivatives Association – but rapid growth is being constrained by the inability of operations to keep up with trading innovations, Aite suggests. One of the key factors constraining growth is the “lack of standards in processing protocols”, it says.

“In a general sense, there is very little standardisation in identifying OTC derivatives instruments,” Aite writes. “There are no general identifiers like Cusip numbers. Specifically, in stock instruments, there is almost no standardisation from the perspective of properly identifying underlying equities.” Traders in the market will often use Bloomberg codes to identify the underlying equity in an OTC equity derivative, it says, but the codes then have to be mapped, for translation purposes, on to another set of codes, such as the Reuters Instrument Code (RIC) or within a utility.
The paper also highlights the impact of corporate actions on OTC equity derivatives. Aite says: “The ability to maintain a proper feed of relevant data for corporate actions and the effect on the underlying equity to the derivatives transaction in place is certainly one of the challenges in OTC equity deriv-atives over the lifetime of the trade.”

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Hearing from the Experts: AI Governance Best Practices

The rapid spread of artificial intelligence in the financial industry presents data teams with novel challenges. AI’s ability to harvest and utilize vast amounts of data has raised concerns about the privacy and security of sensitive proprietary data and the ethical and legal use of external information. Robust data governance frameworks provide the guardrails needed...

BLOG

APAC Data Management Leaders Revealed in Inaugural A-Team Insight Awards Introduction

A-Team Group is pleased to announce the winners of the inaugural Capital Markets Technology APAC Awards 2025. These awards celebrate the technology providers and financial institutions at the forefront of innovation across the Asia Pacific region. Coinciding with the announcement, we have also launched our comprehensive annual report, “The State of Capital Markets Technology in...

EVENT

RegTech Summit New York

Now in its 9th year, the RegTech Summit in New York will bring together the RegTech ecosystem to explore how the North American capital markets financial industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Regulatory Data Handbook – Fourth Edition

Need to know all the essentials about the regulations impacting data management? Welcome to the Fourth edition of our A-Team Regulatory Data Handbook which provides all the essentials about regulations impacting data management. A-Team’s series of Regulatory Data Handbooks are a great way to see at-a-glance: All the regulations that are impacting data management today A...