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OTC Benefits

By: OTC Team, OTC Team

OTC Benefits

 

MARKETS SAME OR BETTER THAN EXCHANGE

As a market making group reliant on brokers for flow, StoneX Markets, LLC (“SXM”) understands that transparency on pricing construction is imperative.

What fundamentally constitutes SXM’s levels is directly derived from what is currently moving the market, therefore SXM’s pricing is generally competitive with the exchange. In addition, SXM may be able to offer levels better than the exchange due to the liquidity of their own temporary position/book.

CONFIDENTIALITY

OTC products are privately negotiated and bilaterally traded between two parties. For that reason, they are done with less disruption to the market, similar to block trades. All trades are reported to a Swap Data Repository as required by CFTC regulations. When/if this position is translated to an exchange-traded position with an EFRP and appears on the Daily Exchange Volume and Open Interest report the next day, after the trade has been executed.

MARGIN THRESHOLD *

SXM offers credit financing to Customers based on audited or attested financials. Financing on initial margin assists in covering the performance bond required of the hedge. Financing of variance margin, or Marked-to-Market unrealized gains or losses, can assist customers in managing cash flow requirements surrounding daily market price fluctuations.

LOWER MARGIN REQUIREMENTS *

OTC products with SXM may allow margins lower than the exchange for customers that are “non-financial end users” under CFTC Margin Rules.* Because the CFTC requires strict qualifications to be eligible to trade OTC products, SXM has an exclusive understanding of our Customer’s risk and are able to be more lenient on margin requirements. SXM estimates that our margin requirements for non-financial end users can be near 80% of what the exchange holds.

EQUAL OR BETTER LIQUIDITY

SXM’s liquidity in OTC products afford Customers opportunities. Previously noted competitive pricing is only one of these benefits.

SXM’s liquidity also allows them to assist Customers in the event of a position unwind. SXM does not charge a fee in these unwinds and honors the Marked To Market level as a place where the customer can exit the trade (with respect to current market concerns).

SXM’s liquidity continues to be advantageous to Customers in regard to deferred contract months. SXM tenor limit depth generally mirrors the exchange open interest and is additionally able to extend beyond the exchange available contract months into further out months.

CUSTOMIZED DERIVATIVES TO FIT ANY MARKET VIEW

Customizable features are a great benefit to Customer’s who are paying excessive costs for coverage they may not need. SXM is able to tailor fit strike prices, contract sizes and expiration dates based on what coverage the Customer’s needs. SXM offers solutions to Customer’s hedging or speculative positions with opportunities to sell above / buy below the current market, fixed cash pay-out, guaranteed quantity, zero-cost up front features or a combination of these features. The measure of these positive features is directly related to the trade-off of risk by way of knock out/knock in and double up features. (See ‘OTC Instruments’)

*Only available to certain qualified customers

 

  • OTC Trading

This material should be construed as the solicitation of an account, order, and/or services and represents the opinions and viewpoints of the individual authors or presenters. It does not constitute an individualized recommendation or take into account the particular trading objectives, financial situations, or needs of individual customers.


The views are current only through the date stated and are subject to change at any time based upon market or other conditions, and StoneX Group Inc. (“SGI”) disclaims any responsibility to update such views. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. Past performance does not guarantee future results.


The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided.


References to certain OTC products or swaps are made on behalf of StoneX Markets, LLC (SXM), a member of the National Futures Association (NFA) and provisionally registered with the U.S. Commodity Futures Trading Commission (CFTC) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ and who have been accepted as customers of SXM.


StoneX Financial Inc. (SFI) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (SEC) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Advisor. StoneX Financial (Canada) Inc. (SFCI) is registered in Canada and is a member of CIRO and CIPF. References to certain securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to certain exchange-traded futures and options are made on behalf of the FCM Division of SFI. Wealth Management is offered through SA Stone Wealth Management Inc., member FINRA/SIPC, and SA Stone Investment Advisors Inc., an SEC-registered investment advisor, both wholly owned subsidiaries of SGI.

R.J. O’Brien & Associates, LLC (RJO) is registered with the CFTC as a Futures Commission Merchant and is a member of NFA.


StoneX Financial Ltd (SFL) is registered in England and Wales, company no. 5616586. SFL is authorized and regulated by the Financial Conduct Authority (FCA) (registration number FRN:446717) to provide services to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorized to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorized and regulated by the FCA under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorized by the FCA.


This communication is issued in the European Economic Area by StoneX Financial Europe GmbH (SFEG). StoneX is the trade name used by STONEX GROUP INC. and all its associated entities and subsidiaries. StoneX Financial Europe GmbH (“SFEG”) is a securities trading firm registered in Germany under Company No. HRB 80844.


StoneX Financial Pte Ltd (Co. Reg. No 201130598R) (“SFP”) is regulated by the Monetary Authority of Singapore and is a Capital Markets Service Licence holder (for dealing in capital market products), an Exempt Financial Adviser (for advising on investment products and issuing or promulgating analyses/ reports on investment products) and a Major Payment Institution (for domestic and cross-border money transfer services).


SFP may distribute analysis/report produced by its respective foreign affiliates within the StoneX Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations Recipients should contact SFP at (65) 6309 1000 for any matters arising from, or in connection with, this webinar.


StoneX APAC Pte. Ltd. (“SAP”) (Co. Reg. No 200616676W) is regulated as a Dealer (PS20190001002) under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019 for purposes of anti-money laundering and countering the financing of terrorism.


StoneX Financial (HK) Limited (CE No.: BCQ152) (“SHK”) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Securities and Dealing in Futures Contracts.


StoneX Financial Pty Ltd (ACN 141 774 727) holds an Australian Financial Service License (AFSL: 345646) for Dealing in Securities, Exchange-Traded Derivatives Contracts, OTC Derivatives Contracts and Foreign Exchange Contracts, and is regulated by the Australian Securities and Investments Commission.


StoneX Securities Co., Ltd. (“SSJ”) (Co. Reg. No 010401047199) is regulated by the Japanese Financial Services Agency as a Type-I Financial Instruments Business Operator (Kanto Local Finance Bureau (FIBO)No.291’), is a member of the Financial Futures Association of Japan for dealing and broking FX and FX Option transactions, and is a member of the Japan Securities Dealers Association for dealing and broking stock indices and option transactions.


Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.


The report/analysis herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.


© 2026 StoneX Group Inc. All Rights Reserved.

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