OTC derivatives market contracts in second half of 2014

The Bank for International Settlements (BIS) today released OTC derivatives statistics at end-December 2014.

  • OTC derivatives markets contracted in the second half of 2014. The notional amount of outstanding contracts fell by 9% between end-June 2014 and end-December 2014, from $692 trillion to $630 trillion. Exchange rate movements exaggerated the contraction of positions denominated in currencies other than the US dollar. Yet, even after adjusting for exchange rate movements, notional amounts were still down by about 3%.
  • The gross market value of outstanding derivatives contracts – which provide a more meaningful measure of amounts at risk than notional amounts – rose sharply in the second half of 2014. Market values increased from $17 trillion to $21 trillion between end-June 2014 and end-December 2014, to their highest level since 2012. The increase was likely driven by pronounced moves in long-term interest rates and exchange rates during the period.
  • Central clearing, a key element in global regulators’ agenda for reforming OTC derivatives markets to reduce systemic risks, made further inroads. In credit default swap markets, the share of outstanding contracts cleared through central counterparties rose from 27% to 29% in the second half of 2014. In interest rate derivatives markets too, central clearing is becoming increasingly important.