Clearing the way?

The German over-the-counter market has been growing quickly in recent years, but a series of shocks has sparked fears of credit risk exposure. Can trading regain recent highs and save the OTC market from credit-wary traders, asks Joel Hanley

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The German electricity market has long been seen as the power market of the future for over-the-counter (OTC) trading. But some recent setbacks have seen a dip in market confidence and an increased wariness from traders looking to get into this sector. Now firms in the OTC business are looking to get the market back on track, and are focusing much of their attention on clearing.

Electricity price spikes in Germany in mid-December 2001 saw the peak spot market at the Leipzig Power Exchange

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