The over-the-counter derivatives market in Brazil is expected to take off this year in response to recent regulatory changes. The main spark was a new bankruptcy law passed last month, which has established netting agreements. Netting has proved crucial in triggering the growth of derivatives in other emerging markets, according to lawyers at the conference. In a further boost to the OTC market the Central Bank has indicated in recent weeks it may allow trades to be settled in currencies other than the Brazilian real.
Luciana Bittar, general counsel at Merrill Lynch in Brazil, told ISDA delegates the new regulation would significantly improve liquidity in Brazil. Brazil´s futures market is the sixth largest in the world, with around USD200 billion traded annually, and the OTC market is worth an estimated USD100 billion, explained Bittar.
