For
Immediate Release Tuesday, November 12, 2002
For More Information, Please Contact:
Stacy Carey, ISDA New York, (212) 901-6000;
Fax (212) 901-6001; scarey@isda.org
ISDA 2002 MARGIN SURVEY
REPORTS $437 BILLION OF COLLATERAL IN USE; 75% INCREASE OVER 2001 LEVELS
“The growth
in collateral use demonstrates the commitment of derivatives dealers and
end-users to effectively manage counterparty credit exposures,” said Robert G.
Pickel, ISDA’s Executive Director and Chief Executive
Officer.”
Of the 71 firms responding to the 2002 Survey, 46
are banks, 22 are other financial service firms and 3 are energy firms. This is
a significant increase over the 43 respondents in the 2001 Survey. Survey
respondents report over 28,000 collateral agreements in place, compared with
16,000 in the 2001 Survey and 11,000 in the 2000 Survey. Credit risk reduction continues to be the
most important reason for respondents to use collateral; next in importance is
regulatory capital savings. Other
factors include access to more complex trades and the ability to price more
competitively. Respondents in this year’s Survey forecasted further growth in
collateral agreements of 19 percent during 2002.
Respondents further report that collateral covers
about half of fixed income derivatives trade volume and 40 percent of
counterparty credit exposure. The 36
percent reduction in exposure among small collateral programs – about one third
of respondents – demonstrates that a small number of agreements can yield
significant credit exposure reduction.
The Survey is designed to describe and communicate the current status of collateral management in an objective and consistent manner, track the extent to which firms adopt practices recommended in the ISDA Guidelines for Collateral Practitioners and the 1999 Collateral Review and provide industry participants with information to assist in internal collateral functions. The Survey is also designed to provide new entrants to the market with baseline data to evaluate the benefits and opportunities of collateral management and to promote greater transparency by increasing the understanding of collateral management. The full Margin Survey can be accessed under the What’s New section of ISDA’s web site.
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 590 member institutions from 46
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.
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