Nordic Fixed Income Derivatives are traded and cleared in a unique market structure. Trading is performed off exchange (“OTC”) and then reported to OMX Derivatives Markets who becomes the counterparty to both the buyer and seller, i.e. central counterparty (“CCP”) clearing. This structure combines the advantages of a cleared market, with the flexibility and the secured liquidity of a market maker driven OTC market.

Designated market makers quote bid-offer prices on request from customers. The presence of multiple designated market makers ensures that a market participant always can find fair and tradable prices. Market makers also quote indicative derivative prices in OMX Nordic Exchange’s SAXESS system. These prices are disseminated through information vendors. Derivative contracts are not traded in the SAXESS system but the indicative prices serve as good indicators of the prevailing market price level.

A trade between a market marker and a customer is initially a bi-lateral buy or sell agreement between the two parties. After trade execution the market maker report trade details to OMX Nordic Exchange, who match the trade and offer CCP services. By acting as a CCP, OMX Derivatives Markets takes on the contract obligations against both the buyer and the seller. There are several advantages with CCP-clearing, such as administration of payments and deliveries, counterparty risk issues and provision of multilateral netting possibilities.