Size and Uses of the Non-Cleared Derivatives Market

The derivatives industry has made huge progress in moving towards central clearing, particularly in the interest rate derivatives (IRD) space. By the end of 2013, approximately 65% of IRD notional outstanding had been cleared through central counterparties (CCPs), even before clearing mandates are in force in much of the world. This figure will increase as more countries develop the relevant infrastructure and mandates take effect.

However, a meaningful portion of the derivatives market will remain uncleared. These instruments are often vital cogs in the risk management strategies of corporates, insurance companies, pension funds, sovereigns, smaller financial institutions and others. Without them, these entities may experience greater earnings volatility due to an inability to qualify for hedge accounting, or be unable to offset the interest rate, inflation and longevity risks posed by long-dated pension or insurance liabilities.

This ISDA study focuses specifically on the interest rate derivatives market to analyse the size of the non-cleared segment and the instruments it encompasses. The report then describes some common uses for these products by derivatives end-users.

Documents (1) for Size and Uses of the Non-Cleared Derivatives Market

Episode 56: Countdown to Treasury Clearing

With less than nine months to go until the first US Treasury clearing mandates come into force, BlackRock’s Tyler Wellensiek and BNY’s Nate Wuerffel discuss industry progress. Please view this page via Chrome to access the recording.

Response to Eurosystem Consultation on Appia

On April 22, ISDA responded to the Eurosystem consultation on the Appia roadmap. ISDA broadly supports the roadmap and its high level principles, while recommending that the principle on market access and integration should be expanded to explicitly address interoperability...