Correspondence: Themis D. Pantos, Accounting and Finance Department, College of Business, San Jose State University, One Washington Square, San Jose, CA 95192-0066, USA. Tel: +1 408 924 3472; Fax: +1 408 924 3463; E-mail: pantos_t@cob.sjsu.edu

¹Themis D. Pantos is Professor of Finance in the Department of Accounting and Finance, College of Business, at the San Jose State University, California, USA. He received his PhD in Finance from the Joseph L. Rotman School of Management, University of Toronto, Canada, his MA in Economics from York University, Downsview, Ontario, Canada and his BBA from the Graduate Industrial School of Thessaloniki, Thessaloniki, Greece respectively. He has published numerous articles in various peer-reviewed finance, taxation, and economics journals. Dr Pantos' research and teaching interests are in the areas of Capital Markets and Institutions, International Finance and Derivative Securities, and he is the winner of the College of Business Research Award (2007) and a holder of the Lucas Research Fellowship for the academic years (2007, 2006), respectively. He has also won several Academic California State University Research Awards and is the winner of the Outstanding Faculty Award (2007), from the Disability Resource Center, and a holder of the prestigious Outstanding Undergraduate Professor Teaching Award (2004), at the San Jose State University. He was nominated for the President Teaching/Scholar Award at San Jose State University in 2006 and 2002 respectively and has also won 'The MBA Faculty Choice Award' in 2000, at Rutgers University, Camden, New Jersey.

Received 3 May 2007; Revised 3 May 2007.

Abstract

Emm and Gay (2005) have put forward an academic paper that merits a response because of its own strength and the misunderstandings of the economic and risk implications of the existence of high concentration ratios in the OTC dealer derivatives markets. This study suggests that their analysis is incorrect. In addition, this paper states that high dealer concentration ratios in the OTC financial markets do not indicate derivative markets that are not competitive and vulnerable to the financial sector weaknesses.