Collateral use in derivatives transactions up to $1.2 trillion

The use of collateral in derivatives transactions has leapt to $1.2 trillion, according to the International Swaps and Derivatives Association’s 2005 Survey. This represents an 18.4% increase over the corresponding figure in the 2004 Survey.

“In the light of this continued growth, we have published the Isda 2005 Collateral Guidelines,” said Bob Pickel, Isda chief executive. “They will serve as a benchmark on the current state of collateralisation and as a reference tool for practitioners using collateral to effectively mitigate credit risk.”

The number of collateral agreements increased to over 70,000 in the 2005 Survey from 54,000 in 2004 and 38,500 in the previous year. It also found that 55% of all derivatives transactions, measured by either volume or exposure, were now covered by collateral, up from 50% in 2004.