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62% of OTC trades centrally cleared – BIS surveys

More dealers are clearing over-the-counter (OTC) interest rate derivatives through central counterparties (CCPs) but central clearing is far less common for other types of OTC trades, according to the Bank for International Settlements (BIS).

The results of the BIS semiannual and triennial surveys of outstanding OTC derivatives positions show that three-quarters of dealers report clearing OTC interest-rate derivatives contracts through CCPs in the first half of 2016. This compares with 37 per cent for credit derivatives and less than 2 per cent for OTC foreign exchange and equity derivatives.

The surveys found that, overall, 62 per cent of the $544 trillion-worth of notional amounts outstanding were centrally cleared.

According to the BIS, this is the first time these periodic surveys have captured comprehensive data on positions with central counterparties (CCPs).

The BIS reported also found that:

  • The gross market value of outstanding OTC derivatives (in other words, the “cost of replacing all outstanding contracts at current market prices”) rose to $20.7 trillion at the end of June 2016 (compared to $14.5 trillion at the end of 2015).
  • The gross market value of foreign exchange derivatives involving the yen and pound sterling more than doubled in the first half of 2016, on the back of sharp moves in the respective currencies.
  • The vast majority (94 per cent) of outstanding positions in OTC derivatives markets are concentrated among major dealers from 13 countries. The BIS stated: “Of the $544 trillion in notional amounts outstanding at end-June 2016, $512 trillion (94 per cent) was reported by dealers from the 13 countries that participate in the BIS semiannual survey, and $32 trillion by dealers that participate only in the BIS Triennial Survey.”

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Dealing & Trading Platforms
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