What Is Bilateral Agreements

For a bilateral agreement, the following formula may be applied: OTC derivatives are bilateral agreements between two counterparties that are not traded or executed on a stock exchange. In some cases, OTC transactions can be recorded via an exchange without a margin mechanism. Compared to listed derivatives that are standardized, OTC products are tailored to the needs of both counterparties. The warning signs of this type of transaction can be found in the following situations: bilateral agreements can often trigger competing bilateral agreements between other countries. This can take away the benefits offered by the free trade agreement between the two home nations. These two parties can be two nations or two international organizations, or one nation and an international organization, or two individuals. .

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