All material subject to strictly enforced copyright laws. © 2022 Euromoney Institutional Investor PLC group
Derivatives

OTC Mart Weathers Tokyo Exchange Chaos

The over-the-counter derivatives market in Japan held strong last week, in spite of an equity selloff which forced the Tokyo Stock Exchange to close early Wednesday.

The over-the-counter derivatives market in Japan held strong last week, in spite of an equity selloff which forced the Tokyo Stock Exchange to close early Wednesday. The Japanese market took a dive following an investigation into listed internet stock Livedoor, falling 2.9% Wednesday.

Equity specialists said the impact was limited on the OTC side due to the product types that are popular in the market. Most equity-linked products are designed for investors to express bullish views and knock out on the upside. "In a way, these products actually help limit the market falling as houses are long gamma and need to buy stock for these positions," explained a dealer. The high levels of volatility and cheaper stock valuations could actually be a benefit for the equity-linked market in the medium-term as some investors that remain bullish may be enticed by the more attractive levels, added an equity structurer.

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree