What are OTCs?

OTCs (Over The Counter derivatives) are instruments that are privately negotiated, transacted, and settled bilaterally between two counterparties.​

  • Widely used in many markets – foreign exchange, interest rates, equities, commodities​
  • OTCs can be settled by exchanging cash, futures, or by embedding the result in a physical contract
  • OTC products can be specifically tailored to address the hedger’s risk profile and needs​

When trading under an OTC framework with Marex:​

  • Initial Margin is fully funded, so you can reallocate hedging capital elsewhere​
  • Variation Margin is funded up to a certain threshold (subject to credit approval)​

OTC products complement exchange traded instruments (so clients can open both accounts with Marex)​

The booking entity for all OTC trades is Marex Financial, which is an investment grade, UK-based Non-Bank Financial institution, regulated by the FCA​

OTC vs ETD

Over-The-Counter (OTC)​

Client will face Marex on the trade (bilateral)​
Typically, no IM required and flexible VM credit​
Both Standard & Customized​
Futures and Options look-alikes ​
Product variety with flexible payoffs​
Monthly averaging (Asian style) possible​
Single or Multi-asset (e.g. time spreads/arbs)​
Combined asset + FX hedge (hybrids)​
Flexible maturity​
Flexible size / Broken lots

Exchange-Traded Derivatives (ETD)​

Client faces Exchange on the trades​
Typically traded under IM/VM ​
Standard (only Futures, Calls or Puts)​
Futures and Options​
Limited product offer​
Only bullet (European style) expiries​
Single asset​
Asset and FX hedges need to be done separately​
Fixed maturity​
Fixed size​