The 2011 Margin Survey of the International Swaps and Derivatives Association, Inc. (ISDA) has found that, among large dealers, 80% of all transactions are now executed with the support of a collateral agreement.
The survey was released at the 26th Annual General Meeting of the organization today in Prague.
The process of reconciling collateralized portfolios shows steady advances in adoption, ISDA says. One hundred percent of large dealers and 73% of all survey respondents indicated that they proactively perform portfolio reconciliations.
Market participants continue to expand their use of collateral to mitigate over-the-counter derivatives credit exposures,” says Conrad Voldstad, CEO of ISDA. This is particularly true in the credit derivatives markets, where 93% of all trades executed were subject to collateral arrangements in 2010.
This year, the survey asked 14 large dealers to indicate their levels of collateralization with central counterparties. The 2011 Margin Survey reports that the large dealers delivered approximately $41 billion of collateral as margin in central counterparties; $36 billion in their executing broker capacity and $5 billion in their clearing member capacity.
The survey also shows that active collateral agreements number almost 150,000, of which 90% are ISDA agreements.
Of the 83 firms responding to the 2010 ISDA Margin Survey, 64 are banks or broker-dealers, and the remaining are institutional investors, government agencies and other end users.
ISDA also released the results of its Benchmarking Survey today.
The survey shows the results of industry investment in infrastructure over the past several years. The confirmation process, for example, has been completely automated and 100% of eligible credit default swaps are confirmed electronically, compared with 99% last year. Similarly, 83% of eligible interest rate derivatives are confirmed electronically compared with 77% last year.
Infrastructure improvements are also reflected in the continuing decrease in confirmations outstanding. Credit derivatives, for example, show an average across all respondents of 0.5 business days worth of aged outstanding confirmations, compared with 1.1 business days in last years survey. Equity derivative confirmations outstanding fell to 6.7 business days compared with 7.3 last year, and interest rate derivatives confirmations also fell to 2.1 business days from 2.8 last year.
Finally, ISDA elected 12 directors to its board at the meeting. Of the 12 directors, 11 currently serve on the board. The new director is Yasuhiro Shibata, joint head of Fixed Income Group, Mizuho Securities.
The re-elected directors are:
– Guillaume Amblard, Global Head of Fixed Income Trading, BNP Paribas- Brian Archer, Managing Director, Global Head of Credit Trading, Citi- Nitin Gulabani, Global Head of Rates, Standard Chartered Bank- Harry Harrison, Head of Rates Trading, Barclays Capital- Alan Haywood, Head of Commercial Development; Integrated Supply & Trading, BP p.l.c.- Peter Healey, COO, Fixed Income, Currencies and Commodities, UBS AG- Jonathan Hunter, Managing Director and Global Co-Head, Fixed Income and Currencies, RBC Capital Markets- TJ Lim, Global Co-Head of Markets, UniCredit- Eric Litvack, Managing Director, COO of Global Equity Flow, Socit Gnrale- Ted MacDonald, Managing Director and Treasurer, The D. E. Shaw Group- Gerhard Seebacher, Managing Director, Head of Global Credit Products, Bank of America Merrill Lynch
The directors continuing on the board are:
– R. Martin Chavez, Managing Director, Goldman Sachs- Bill de Leon, Executive Vice President, Global Head of Portfolio Risk Management, PIMCO- Thibaut de Roux, Global Head of Structured Derivatives, HSBC Bank Plc- Michele Faissola, Managing Director and Global Head of Rates and Commodities, Global Markets Division, Deutsche Bank- Diane Genova, Managing Director and General Counsel, Investment Bank, J.P. Morgan Chase & Co- Yutaka Nakajima, Senior Managing Director, Head of Trading, Fixed Income Japan, Nomura Securities- Stephen OConnor, Managing Director, Morgan Stanley, and Chairman of the ISDA Board- Riccardo Rebonato, Head of Front Office Risk Management and Quantitative Analytics, Royal Bank of Scotland- Eraj Shirvani, Managing Director, Head of Fixed Income for EMEA Region, Credit Suisse- Stuart Spodek, Managing Director, BlackRock- Lili Wang, Executive Director & Senior Executive Vice President, ICBC Ltd.
Additionally, Conrad Voldstad, ISDA CEO; Robert Pickel, ISDA executive vice chairman; and Gay Huey Evans, vice chairman of the board and non-executive chairman of Europe for ISDA, will continue to serve on the board of directors.