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A World Bank report indicates that losses connected to over-the-counter (OTC) derivatives reached approximately $120 billion worldwide in 1998. In the annual report, titled Global Development Finance 1999, the World Bank said the losses resulted from the construction and trading of complex and highly speculative instruments that took place without the necessary risk management controls and enforceable legal documentation in place. According to the report, derivative traders lost $90 billion due to the Russian debt moratorium. Interest rate derivatives and currency swaps tied to Indonesian companies cost traders $15 billion. Contracts based on the interest rate spreads between the U.S. and South Korea lost $2.5 billion.

The Options Industry Council (OIC) announced that the volume of traded equity options jumped 28 percent to 96,284,473 for the first quarter this year, compared 75,197,548 for the first quarter last year. Equity trading volume in March alone totaled 34,524,034 contracts, a 25% increase from the 27,534,093 contracts traded in March of 1998. Average daily volume for the month was 1,501,045 contracts. Open interest equity positions--the total number of options contracts not yet exercised or allowed to expire--also hit record levels at 36,429,117 on March 19. Open interest is one indication of longer-term investing in equity options.

New York-based risk vendor Summit Systems announced in its fiscal year-end report that its focus on operational risk and enterprise-wide risk management issues yielded a number of new clients, including Credito Italiano, Bank of Ireland, The Royal Bank of Scotland and Bayerische Landesbank in Europe; Harvard Management Co. in the U.S.; and Sakura Bank, Mitsui Trust & Banking Company and Nomura Bank International in Japan. Summit added new enhancements including a Credit Derivatives module, which provides pricing, hedging analytics and processing for credit default swaps, credit-linked notes and risky bond trades; Real Time FX Trading for foreign exchange spot, forward and swap transactions; an FX Options module, which allows complete trading and operations functionality for both vanilla and exotic FX options;

DART Ltd., a provider of derivatives-related pricing and risk management software and data services, announced that it has entered into a partnership with Exchange Data International (EDI) Ltd., that calls for EDI to market DART's historical risk data to its existing client list as well as potential customers world-wide. DART's Historical Risk Data Service provides interest rate swaps prices and spreads, swaption volatilities, cap and floor volatilities and currency basis swap Rates. The prices are sourced from Intercapital Brokers Limited and, in some cases, include rates unavailable anywhere else in the marketplace. EDI has extended equities data coverage to derivatives, based on market demand.