ISDA®             

INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION

NEWS RELEASE

 

For Immediate Release Thursday, January 3, 2002

For More Information, Please Contact:

Stacy Carey, ISDA New York, (212) 332-1200; Fax (212) 332-1212; scarey@isda.org

 

ISDA MARGIN SURVEY SHOWS OVER $250 BILLION OF

COLLATERAL IN CIRCULATION

 

NEW YORK, Thursday, January 3, 2002 - The International Swaps and Derivatives Association (ISDA) today announced the amount of collateral in circulation in the derivatives markets now exceeds $250 billion, an increase of 25% over the previous year, according to the ISDA Margin Survey 2001. 

 

“The figures show a continued and growing desire to mitigate credit risk through use of collateral programs,” said Robert G. Pickel, ISDA’s Executive Director and Chief Executive Officer. “This is an area of increasing importance to ISDA’s member firms.”

 

Other important findings include growth in the total number of collateral agreements utilized in the derivatives market and growth in the proportion of institutions with “large” (exceeding 500 agreements) collateral programs.  ISDA estimates the number of collateral agreements in the OTC derivatives market has grown to over 16,000, a 45% increase on the previous year’s figure. The number of firms surveyed with large collateral programs more than doubled to 21% in 2001 from 8% of respondents surveyed in 2000.

 

The predominant driver for use of collateral remains the desire to mitigate credit risk followed by regulatory capital savings. Across the range of institutions surveyed, an average 40% of the derivatives book was covered by collateral. The most commonly used and accepted forms of collateral continue to be US government and agency securities and cash, followed by European government securities and cash. Results from the ISDA Margin Survey 2001 are gathered from responses of 43 member institutions representing a global cross-section of banks, brokers, end-users and other financial institutions.  The 2001 Margin Survey was published on December 31, 2001 and is available on the ISDA web site.

 

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