Isda AGM Singapore: Collateral increases by 19% in OTC trades

The amount of collateral used in the over-the-counter derivatives market has grown annually by 19% to $1.44 trillion, according to the latest data published by the International Swaps and Derivatives Association in its 2006 margin survey.

Respondents reported 104,954 collateral agreements in place, up 48% on last year’s survey results. It also found that 59% of all OTC derivatives transactions measured either by volume or by exposure are now covered by collateral compared with 55% in 2005.

“Collateralisation of privately negotiated derivatives continues to grow at a sustained, rapid pace,” said Isda chief executive Robert Pickel in a statement. “This growth reflects the importance of collateralisation as a risk mitigation tool,”