Approximation to the spatial structure of financial derivative transactions in the otc over-the-counter market
DOI:
https://doi.org/10.3989/estgeogr.202077.078Keywords:
Financial geography, over the counter, capital flows, geoeconomics, financial contagion, swaps, regulation, financial locationAbstract
This paper aims to identify some features of the spatial network of international financial relations in the over-the-counter derivatives market. Its territorial structure has been reconstructed through the 2019 Triennial Survey of Global Derivatives Markets of the Bank for International Settlements, which provides information disaggregated by states and currencies in the contracts signed, making it possible to establish the main characteristics of this financial market.
There is a high concentration of contracts signed in the financial centres of the United Kingdom and the United States, with Hong Kong as the third emerging market. Data from recent years reveal that the UK has tripled the value of this market since the Brexit referendum in 2016, highlighting its international solvency as a financial market of reference, and that the exit from the EU is not harming its global position.
There are several factors that determine the location of hedge funds: an Anglo-Saxon regulatory environment, differences between states in the conditions of legal guarantees, asymmetric information, and the development of herding techniques are some of the conditions that determine the location and morphology of capital flows. Research into the spatial structure of the global financial network can improve knowledge of the process of contagion between territories, and introduce mitigating measures linked to greater control of the regulatory framework of global financial flows.
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