Clearing of interest rate swaps has becoming steadily more prevalent over the past several years, by the end of 2010 exceeding 50% of interest rate swap notional outstanding, according to a study released by the International Swaps and Derivatives Association (ISDA).
ISDAs report was based on statistics published by the Bank for International Settlements (BIS) and LCH.Clearnets SwapClear.
The level of cleared interest rate swaps was just 21% at year-end 2007, ISDA says. Between 2007 and last year, the volume of uncleared interest rate swaps outstanding declined from $201 trillion to $116 trillion, a decrease of $85 trillion, or 42%.
The strong commitment of ISDA and market participants to make the OTC derivatives markets safe and efficient is evidenced by the increased use of central counterparty clearing and the continuing reduction in uncleared volumes, says Conrad Voldstad, CEO of ISDA. Further progress in this area lies ahead as we look to expand central clearing while ensuring that the financial strength, risk standards and governance of clearinghouses remain extremely strong.
ISDA recently released a statement touting the benefits of central clearing of OTC derivatives.
(CG)