However, it should be pointed out that the bilateral negotiation process that occurs in OTC derivatives markets is often

quick and efficient. Dealers have direct phone lines to other dealers as well as to their major customers. Instant messaging is another means of fast, direct communication. A market participant can call up a dealer, ask for quotes, and then repeat with another dealer in a matter of a few seconds. This amounts to a quick survey of several dealers in just a few seconds in order to determine the prevailing price quotes in the market. A quick series of such calls can give a dealer or an active investor a view of the market that is close but not exactly the same that in a multilateral market. However, a quick survey of market quotes is not as useful as seeing the prices at which all other trades are being executed. Also, clearing is conducted bilaterally in OTC markets. Even if trades are actually brokered, the counterparties must ultimately confirm and settle trades on a bilateral principle-to-principle basis.

DERIVATIVES DEALERS
There are reported to be 15 to 20 dealers in Brazils OTC derivatives markets. A dealer is defined in economic terms as a market participant who is actively making price quotes, and is executing buys and sells at the quoted prices. Not every dealer is the same size or acts as a dealer in every type of derivative product. Major dealers include Bradesco, Santander, ABN Amro, Etao, Unibanco, Citigroup, Deutsche Bank, HSBC, CSFB (whose claims to have 15% of customer market), USB Pactual, BNP Paribas, JP Morgan, BBM, and Banco de Brazil. There are also derivatives dealers in external markets such as those in New York and London. These dealers often trade in NDF contracts in order to facilitating trading without having to regularly clear payments through Brazils imperfect spot foreign exchange market.

BROKERS IN OTC DERIVATIVES MARKETS

The role of the brokers in OTC derivatives market is to consolidate information and to allow the major participants to trade with anonymity. Dealers often want to conceal their investments strategies and are concerned that the strategy will be revealed when they conduct large sales or purchases in the market. For instance, they might be concerned that the market will move away from them as they try to execute large volumes of transactions. By trading through a broker, a dealer can maintain their anonymity and benefit from a centralization of market information by posting their quotes and hitting other dealers quotes through the broker.