Ninety percent of non-cleared OTC derivatives trades are now collateralised, according to research by the International Swaps and Derivatives Association (ISDA). The total level of collateral in circulation has fallen 14%, however, to $3.17 trillion, because of the rise of mandatory central clearing under the US Dodd-Frank legislation, the European Market Infrastructure Regulation (EMIR) and others.
ISDA’s Margins Survey also found that cash and government securities comprise around 90% of collateral for non-cleared OTC derivatives.
Portfolio reconciliation is increasingly being adopted as best practice, with 84% of large firms in the survey saying they reconcile their portfolios daily.
“Collateralisation has a fundamentally important role to play in risk mitigation,” said ISDA CEO Robert Pickel. “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.”
The most recent Margin Survey and past surveys dating back to 2006 can be found by clicking here