OTC Derivatives

What are OTC Derivatives?

These refer to Derivative contracts that are traded off exchange or Over The Counter (OTC), but cleared and settled through a Central Counterparty like an exchange or clearing house. Some examples of commonly traded OTC derivative contracts are: 

• Bulk Commodities – Iron Ore & Coal
• Energy – Fuel Oil, Gas Oil & Naphtha
• Freight – Forward Freight Agreements (FFAs) 

Benefits of Clearing

  • The Central Counterparty, as a middleman assumes all contractual rights and responsibilities. This encourages greater confidence and familiarity through the standardisation of contracts.
  • Simplicity is maintained with Central Counterparty being both buyer and seller, this helps to reduce buyer/seller credit risk.
  • There is price transparency as positions are marked to market and cash settled against settlemen prices determined by the Central Counterparty.
  • Better price opportunities can be expected in a wider market place.

Why Trade OTC Derivatives with Phillip Futures?

  • Multi exchange clearing memberships

  • Access to electronic trading to complement OTC clearing

  • Intraday risk monitoring

Trade OTC Derivatives with Phillip Futures

To view the OTC Derivatives Product Information Sheet, click here.

For more information on OTC trading, please give us a call at (65) 6531 1526 / (65) 6531 1531 or send us an email at pfpl_otc@phillip.com.sg.