2. Exchange-Traded versus Over-the-Counter Derivatives

a. define a derivative and distinguish between exchange-traded and over-the-counter derivatives;

What is an exchange-traded derivative?
Exchange-traded derivatives are created, authorized, and traded on a derivatives exchange, an organized facility for trading derivatives.

What is an over-the-counter derivative?
Over-the-counter derivatives are transactions created by any two parties off a derivatives exchange.

Source:

• CFA