“There you go again….”

Back in the 1980 presidential campaign, Ronald Reagan used this phrase to great effect to fend off criticism that was untrue or exaggerated. Today, it’s a phrase we think about saying often, particularly when it comes to news reports about the OCC’s Quarterly Report on Bank Trading and Derivatives Activities.

The 2011 second quarter edition is just out and, as usual, it’s creating some misperceptions that need to be clarified. The New York Times, for example, reported on it and said that “The nation’s four biggest banks… are the biggest players, holding roughly 95 percent of the industry’s total exposure to derivatives.”

As we’ve noted in the past, the OCC report only covers part of the US market. The data includes derivatives exposures of US dealers and US subsidiaries of non-US dealers. But it does not include exposures arising from transactions between a US firm and a non-US dealer.

Even more importantly, the OTC derivatives market is global, with competitors from all geographic sectors. On a global basis, the five largest US-based dealers held 37 percent of total derivatives notional according to an analysis ISDA did last year. The G14 group of dealers (the 14 largest) held 82 percent of total notionals outstanding.

The depth and breadth of competition in OTC derivatives is also supported by data from SwapClear, which requires members to have at least $1 trillion in notional outstanding. There are at last count 38 separate dealer/members who meet this criterion.

This leads us to ask: which other global markets have as many firms competing for business as this one?

Episode 59: Reducing Burdens

As she nears the end of her term as chair of the European Securities and Markets Authority, Verena Ross joins The Swap to discuss progress in simplifying and reducing the burden of EU financial regulation, including transaction reporting. Please view...

CDS Market Dynamics: Record 2025

Global credit default swap (CDS) market activity reached a record $41.8 trillion in 2025, surpassing the previous peak of $38.7 trillion in 2022. Index CDS drove the increase, accounting for 93.3% of total activity and reaching a record $39.0 trillion....

ISDA Letter to BCBS on RMA Models

On July 24, ISDA wrote to the Basel Committee on Banking Supervision (BCBS) to request guidance on how the proposed Risk Mitigation Accounting (RMA) model under International Financial Reporting Standard (IFRS) 9/IFRS 7 should be treated for prudential regulatory capital...