Click to open the OTC Derivatives Market Analysis PDF
NEWS RELEASE
For Immediate Release
ISDA Publishes OTC Derivatives Market Analysis
NEW YORK, Thursday, May 26, 2011 – The International Swaps and Derivatives Association, Inc. (ISDA) published today a new analysis of the over-the-counter (OTC) derivatives market based on year-end statistics published by the Bank for International Settlements (BIS) and LCH.Clearnet’s SwapClear.
According to the analysis, the level of cleared interest rate swaps exceeded 50 percent of interest rate swap notional outstanding at the end of 2010, up from 21 percent at year-end 2007. Over the same time frame, the volume of uncleared interest rate swaps outstanding declined from $201 trillion to $116 trillion, a decrease of $85 trillion or 42 percent.
“The strong commitment of ISDA and market participants to make the OTC derivatives markets safe and efficient is evidenced by the increased use of central counterparty clearing and the continuing reduction in uncleared volumes,” said Conrad Voldstad, ISDA CEO. “Further progress in this area lies ahead as we look to expand central clearing while ensuring that the financial strength, risk standards and governance of clearinghouses remain extremely strong.”
The ISDA analysis also revealed that the level of OTC derivatives notional outstanding, excluding FX derivatives, and adjusting for the impact of clearing, declined by 12 percent from $475 trillion at year-end 2007 to $419 trillion at year-end 2010. The decline reflects the impact of the industry’s portfolio compression efforts, which has reduced notional outstanding by approximately $137 trillion during the three-year time span. The decline in notional amount outstanding does not necessarily indicate a change in new OTC derivatives market activity. In addition, netting and collateral reduce the gross market value of OTC derivatives transactions by 95 percent. Expressed as a percentage of notional outstanding, gross credit exposure after netting and adjusted for collateral is approximately 0.2 percent.
“Portfolio compression (or tear-ups) has had a significant impact on outstanding volumes as market participants look to reduce credit risk,” said Mr. Voldstad. “The industry’s collaborative work on documentation, netting and collateral is also having a major impact in reducing risk in our markets.”
The full ISDA OTC Derivatives Market Analysis is available on ISDA’s website here.
For More Information, Please Contact:
Deirdre Leahy, ISDA New York, +1 212 901 6021, dleahy@isda.org
Donna Chan, ISDA Hong Kong, +852 2200 5906, dchan@isda.org
About ISDA
Since 1985, ISDA has worked to make the global over-the-counter (OTC) derivatives markets safer and more efficient. Today, ISDA is one of the world’s largest global financial trade associations, with over 800 member institutions from 56 countries on six continents. These members include a broad range of OTC derivatives market participants: global, international and regional banks, asset managers, energy and commodities firms, government and supranational entities, insurers and diversified financial institutions, corporations, law firms, exchanges, clearinghouses and other service providers. 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 and Derivatives Association, Inc.
Documents (1) for ISDA Publishes OTC Derivatives Market Analysis
Latest
Response to CFTC on 24/7 Trading
ISDA, SIFMA, and SIFMA AMG jointly filed a comment letter on May 21, 2025 in response to the US Commodity Futures Trading Commission (CFTC) request for comment on 24/7 trading and clearing. Overall, the Associations believe that the feasibility of...
ISDA AGM Studio: Jack Hattem and Jared Noering
Jack Hattem, ISDA board member and managing director, global fixed income at BlackRock, and Jared Noering, ISDA board member and global head of fixed income trading at NatWest Markets, talk to Nick Sawyer, ISDA’s global head of communications, on how...
ISDA Publishes ISDA SIMM® Version 2.7+2412
This version of the ISDA SIMM has updates that are based only on the full recalibration of the model and marks the first ISDA SIMM version publication of the new semiannual calibration cycle in 2025. The ISDA SIMM methodology remains...
ISDA AGM Studio: José Manuel Campa, EBA
José Manuel Campa, chairperson of the European Banking Authority, speaks to Mark Gheerbrant, ISDA’s global head of risk and capital, about concerns over differences in timing and content of the Basel III reforms across jurisdictions and what can be done...