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
Latest
ISDA Omnibus Canadian Representation Letter
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Joint Response on Cross-margining
On August 31, ISDA and FIA submitted a letter to the US Commodity Futures and Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on the agencies’ joint request for comment on the implementation of portfolio margining and cross-margining...
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Response to SEC on FICC Guaranty Fund
On September 1, ISDA and FIA submitted a joint response to the US Securities and Exchange Commission (SEC), supporting the Fixed Income Clearing Corporation’s (FICC) proposal to establish a dedicated guaranty fund at its government securities division (GSD). FICC had...