Again, in a market that is essentially wholesale in nature and confined to a few large participants, an OTC trade may offer cost /price advantage in comparison with its exchange traded alternative. As we know, standardising products is a pre-requisite for moving them to exchanges and this can pose challenges. If not carefully orchestrated the exchanges themselves can pose vulnerabilities and systemic challenges.
Lastly, the oversight of such exchanges has to be robust and effective. Let me now dwell on the developments in our own forex market as regards centralised clearing and reporting of OTC transactions.