Journal Press India^®

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This paper attempts to review OTC derivatives markets in 8 Asian economies, namely- China, Chinese Taipei, India, Indonesia, Korea, Malaysia, Philippines and Thailand. At the same time, it attempts to identify factors determining the OTC foreign exchange derivatives turnovers. Easy bi-variate associations between the turnover of foreign exchange derivatives and some systemic economic conditions, commonly correlated with the expansion of derivatives markets, have been examined. Being first step towards more comprehensive econometric analysis, the goal here is, to define possible drivers of foreign exchange derivatives turnover. The study shows that activities in OTC derivatives markets are growing in these Asian economies and their share in global derivatives markets is increasing as well. The pace of activities in OTC interest rate derivatives in these economies lagged behind that of OTC foreign exchange derivatives activities. In relation to those in advanced economies, this illustrates lagging growth and liquidity in bond and money markets in these economies. There has been major share of activities in derivatives markets with reporting dealers, indicating relative immaturity of OTC derivatives markets in these economies. About one-third of transactions in derivatives markets in these Asian economies related to cross-border. However, this is far below the level of cross border transactions in advance economies.

Keywords

Foreign exchange derivatives, interest rate derivatives, foreign exchange swaps, foreign exchange outright forwards, currency swaps.

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