Part III: Analyze OTC Markets with Spotlight

Kyle Loomis · June 5, 2024

Part III: Analyze OTC Markets with Spotlight

In the last two posts, we covered how Spotlight helps market participants optimize pricing and generate trading ideas for OTC derivatives. These posts highlight various use cases to help buyers and sellers become more efficient and increase sales revenue. Spotlight also helps managers and executives analyze OTC markets to get a high-level understanding of the landscape.

Analyzing the OTC Markets

Futures markets support a range of products, but they fall short on many fronts:

  • Smaller trading size: The futures market is better suited for smaller trades while larger block trades are traded over-the-counter to avoid moving the market.
  • Lack of anonymity: Trading through an exchange provides immediate visibility for all market participants, making it more difficult to mask strategies, especially for large block trades.
  • Limited product selection: Exchanges fail to support bespoke products and instruments.

Market participants turn to OTC markets to bypass these shortcomings. But trading over-the-counter is a double edged sword – the inherent opacity of OTC markets makes it difficult to perform analysis. Participants are left to extrapolate movements in OTC markets based on futures markets.

This is where Spotlight comes in. Spotlight not only captures all of the uncleared OTC trades, but also provides users with analytical tools, giving them a new way to analyze OTC markets.

It’s important to understand where money is flowing so you can focus efforts on the most valuable segments. Spotlight provides market intelligence tools to help you understand market trends. Whether it’s an overview of biggest movers, comparison of activity by expiration date, or change in total notional value traded, Spotlight’s tools give you detailed insights that can supercharge your work.

Market Share Analysis

While it’s easy to know your market share in exchange traded markets, it’s difficult to pinpoint in OTC markets. Markets are fragmented, there is no central reporting authority, and the data available is often erroneous or masked.

Spotlight’s proprietary models clean up and unmask data so you can see how dealers are trading. We provide analytical tools to aggregate data, such as trade volumes on specific markets and products, enabling you to understand your market share and how much risk you are taking on.

Conclusion

Spotlight delivers detailed insights into market trends, helping you to understand risk, capitalize on emerging opportunities, and stay ahead of the competition.

Join us at Spotlight and improve your approach to analyzing the OTC markets, leveraging information as your most powerful asset.