Embargoed until 11.30 am EST, Wednesday, September 28, 2005
For More Information, Please Contact:
Scott Marra, ISDA New York (212) 901-6000; smarra@isda.org
Susan Hartzell, Kennedy & Company (914) 961-2436 x15; susan@kennedycom.com
NEW YORK, WEDNESDAY, SEPTEMBER 28, 2005 – At its 2005 Regional Member Conference in New York today, the International Swaps and Derivatives Association, Inc. (ISDA) announced the results of its Mid-Year 2005 Market Survey of privately negotiated derivatives. According to the Survey, the notional amount for credit derivatives grew by almost 48% in the first six months of the year to $12.43 trillion from $8.42 trillion. This represents a year-on-year growth rate of 128% from $5.44 trillion at mid-year 2004. Credit derivatives, for the purposes of the Survey, comprise credit default swaps, baskets and portfolio transactions indexed to single names, indexes, baskets, and portfolios.
The notional principal outstanding volume of interest rate derivatives, which include interest rate swaps and options and cross-currency swaps, grew by almost 10 percent to $201.4 trillion from $183.6 trillion. The annual growth rate for interest rate derivatives to mid-2005 is 22 percent from $164.49 trillion in mid-2004.
Notional outstanding volume for equity derivatives, which consist of equity swaps, options, and forwards, grew by over 16 percent from $4.15 trillion to $4.83 trillion, an increase over the 10 percent growth in the second half of 2004. This represents year-on-year growth of 28 percent from $3.79 trillion at mid-year 2004.
“Consistently strong growth across all sectors of the business demonstrates the ongoing recognition of the benefits that derivatives offer as risk management tools,” said Robert Pickel, Executive Director and Chief Executive Officer of ISDA. “This strong growth also highlights the importance of ISDA’s and our members’ efforts to improve the infrastructure of the business in order to increase operational efficiency and reduce risk,” he said.
The survey records notional outstanding volumes for all products covered, i.e., notional amounts of business transacted in relation to the underlying asset, versus the net exposures participants have to one another after conducting offsetting transactions and other credit risk mitigation techniques, such as netting. ISDA surveys its Primary Membership twice yearly on a confidential basis. In this survey, 101 firms provided data. All notional principal outstanding amounts have been adjusted for double counting of inter-dealer transactions. All major dealers responded.
ISDA is the global trade association representing leading participants in the privately negotiated derivatives industry. ISDA was chartered in 1985, and today has more than 650 member institutions from 47 countries on six continents. These members include most of the world's major institutions that deal in privately negotiated derivatives, as well as many of the businesses, governmental entities and other end users that rely on over-the-counter derivatives to manage efficiently the financial market risks inherent in their core economic activities. Information about ISDA and its activities is available on the Association's web site: www.isda.org.
®ISDA is a registered trademark of the International Swaps & Derivatives Association, Inc.