Collateral dipped in 2013, finds ISDA
17 April 2014 Munich
Image: Shutterstock
The estimated amount of collateral in circulation in the non-cleared OTC derivatives market decreased 14 percent from $3.7 trillion at the end of 2012 to approximately $3.17 trillion by December 31 2013, according to the 2014 International Swaps and Derivatives Association (ISDA) Margin Survey.
The survey was presented at ISDA’s general meeting in Munich recently. The collateral decrease can be attributed to a rise in mandatory central clearing, found the association.
Active agreements supporting OTC derivatives transactions reached 133,155 at the end of 2013. Almost 90 percent of those were ISDA deals.
Cash and government securities accounted for roughly 90 percent of non-cleared OTC derivatives collateral.
The 2014 Margin Survey also demonstrated that portfolio reconciliation is widely used and considered a best market practice, according to ISDA. Larger-sized portfolios (100-499 trades) showed a 5 percent increase in daily reconciliation at the end of 2013 compared to 2012.
Eighty-four percent of large firms surveyed indicated they reconcile their portfolio mix on a daily basis.
“Collateralisation has a fundamentally important role to play in risk mitigation,” said Robert Pickel, CEO of ISDA.
“Over the past 14 years, ISDA’s Margin Survey has provided a consistent set of benchmarks for collateral use and is part of a broader set of the association’s initiatives in the area of collateral, including documentation, best practices and practitioner guidelines.”
Banks, broker-dealers, asset managers, hedge funds and insurance companies were among those that responded to the survey.
The survey was presented at ISDA’s general meeting in Munich recently. The collateral decrease can be attributed to a rise in mandatory central clearing, found the association.
Active agreements supporting OTC derivatives transactions reached 133,155 at the end of 2013. Almost 90 percent of those were ISDA deals.
Cash and government securities accounted for roughly 90 percent of non-cleared OTC derivatives collateral.
The 2014 Margin Survey also demonstrated that portfolio reconciliation is widely used and considered a best market practice, according to ISDA. Larger-sized portfolios (100-499 trades) showed a 5 percent increase in daily reconciliation at the end of 2013 compared to 2012.
Eighty-four percent of large firms surveyed indicated they reconcile their portfolio mix on a daily basis.
“Collateralisation has a fundamentally important role to play in risk mitigation,” said Robert Pickel, CEO of ISDA.
“Over the past 14 years, ISDA’s Margin Survey has provided a consistent set of benchmarks for collateral use and is part of a broader set of the association’s initiatives in the area of collateral, including documentation, best practices and practitioner guidelines.”
Banks, broker-dealers, asset managers, hedge funds and insurance companies were among those that responded to the survey.
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