ISDA COLLATERAL SURVEY PROBES REASONS WHY COLLATERALIZATION KEEPS GROWING IN PRIVATELY NEGOTIATED DERIVATIVES INDUSTRY

AMSTERDAM, Thursday, March 16, 2000 - A collateral survey released today by the International Swaps and Derivatives Association (ISDA) provides details and insights as to why collateralization has emerged as a key tool that is increasingly being used to mitigate credit risk in the privately negotiated derivatives industry.

ISDA's survey estimated the number of collateralized counterparties at between 1,500 to 2,500 at present and the total of reported signed collateral agreements at 12,000. The survey's 46 respondents reported a 39% increase in the number of collateral agreements they transacted in 1999 over 1998 and projected a further 34% increase this year. The ISDA 1999 Collateral Review estimated the total value of collateral in circulation in the OTC derivatives industry at $175 billion to $200 billion at the close of 1998. The 2000 survey is consistent with that estimate and indicates it may well be larger.

The survey, ISDA Collateral Survey 2000, found that such risk management concerns as credit limits have been driving the development of collateral management as an established discipline with a well-defined framework of responsibilities and objectives. Collateralization's important business benefits -- principally credit risk management, expanded credit capacity, increased liquidity and economies of capital costs - are another important impetus.

Principal constraints to the further expansion of collateralization include legal uncertainty, infrastructure limitations, lack of expertise and the narrowness of collateral eligibility tables, according to the survey. In light of these challenges, the survey reaches three conclusions and recommendations: