NEW YORK, Tuesday, October 31, 2000 - The first industry-sponsored survey providing detailed quantitative information on the processing of privately negotiated derivatives was released today by the International Swaps and Derivatives Association (ISDA). The ISDA 2000 OPERATIONS BENCHMARKING SURVEY: Over-the-counter Derivatives Operations Issues focuses principally on trade processing and documentation.
Member interest in having such data led to the establishment of the Operations Benchmarking Survey Advisory Committee that oversaw the project. "Against a background of increasing volumes, complexity and costs, it has become critical for operations managers to have available external benchmarks to compare their performance with that of other industry participants, and the survey answers that need," according to Neil Wright, Senior Vice President and Head of Derivative Operations of The Chase Manhattan Bank. In addition, the survey responds to the recognition that such information is of growing interest to industry participants and to regulators and auditors. "There is clearly an increasing global focus on both operations and operational risk, " said Andrew Nicholson, Global Head of OTC Derivatives Operations of CSFB, who co-chaired the Advisory Committee with Mr. Wright. Lombard Risk Consultants developed the database and provided controls on the product
The survey's 39 respondents represented 13 countries: 20 European institutions, 13 North American and six Asian Pacific. The respondent population was divided into three tiers, representing large, medium and small firms based on the number of trades processed, headcount and global nature of their operations. Responses covered OTC interest rate derivatives, foreign exchange options, credit derivatives and commodity derivatives. All respondents gave data on OTC interest rate derivatives. Each survey respondent has received individual feedback comparing its data with the total respondent population and with respondents in its size category.
Two themes emerged: the need for greater automation in processing and the need for standardization of terms. The survey indicated that the primary reasons for delays in processing and disputes between parties are the largely manual nature of OTC operations and the lack of standard terminology and trade characteristics. Automated technology solutions to confirmation delivery are considered very important and 60% of respondents are participating in industry initiatives.
The ISDA Operations Committee intends to repeat the survey annually and anticipates a wider group of respondents. The 2001 survey will focus on two goals: identification of key industry benchmarks and providing more detailed qualitative and quantitative high level data. ISDA contemplates that the 2001 survey will provide a set of realistic recommendations for the industry to reduce operational delays and mitigate costs and risks
The ISDA 2000 OPERATIONS BENCHMARKING SURVEY: Over-the-counter Derivatives Operations Issues is available in hard cover from the ISDA New York office and will shortly be available here as a word.doc file.