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OIS discounting dilemma for the buy-side
Dealers were first to embrace the move to overnight indexed swap discounting, but other market participants are now trying to get up to speed, resulting in the creation of a range of new tools. But are buy-side firms moving fast enough? By Clive Davidson
![calculator calculator](/sites/default/files/styles/landscape_750_463/public/import/IMG/049/109049/calculator2-580x358.jpg.webp?itok=GtihNxxG)
Derivatives end-users have historically had a sure-fire way of making certain they’re receiving a reasonable price from a dealer – they could price the derivative themselves. Armed with little more than a basic knowledge of financial maths and an Excel-based pricing model, canny investors and hedgers could quickly replicate prices – for simple plain-vanilla products at least – and ensure their banks were treating them fairly.
That’s not so easy today. Derivatives prices now depend on a multitude
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