Derivatives Markets
There are two distinct groups of derivative contracts:
Over-the-counter (OTC) derivatives: Contracts that are traded directly between two eligible parties, with or without the use of an intermediary and without going through an exchange.
Exchange-traded derivatives: Derivative products that are traded on an exchange.
Participants
10.130 Participants of this market can broadly be classified into following two functional categories:
User: A user participates in the derivatives market to manage an underlying risk.
Market-maker: A market-maker provides bid and offer prices to users and other market-makers. A market-maker need not have an underlying risk. At least one party to a derivative transaction is required to be a market-maker.