Isda AGM: Derivatives post-trade processing improves

The International Swaps and Derivatives Association (Isda) says post-trade processing has continued to improve over the past year, with lower numbers of confirmations outstanding and higher levels of automation.

In its 2009 Operations Benchmarking Survey, unveiled today at Isda's 24th annual general meeting in Beijing, Isda reports a fall in the number of confirmations outstanding across all derivatives classes except currency options. Credit derivatives were one area of real progress, declining from 6.6 business days' worth of outstanding confirmations over 2007 to 3.8 days over 2008. Confirmations outstanding of equity derivatives fell from 13.3 days' worth to 9.2 days.

The survey also showed an increase in activity in over-the-counter derivatives markets – monthly events volumes, defined as new trades, novations and terminations, increased by 2% over 2008, compared with 28% over 2007. Classes that saw the biggest rises were commodity derivatives (38%), interest rate derivatives (28%) and credit derivatives (10%), particularly in large firms. There was a decrease in event volumes for currency options (30%) and equity derivatives (11%).

Ninety-two per cent of credit derivatives are now processed electronically, according to the survey. Equity derivatives still lag behind, with only 23% processed electronically. Dispatch times for electronic and non-electronic confirmations are reported to have improved over the past year.

Credit derivatives are the strongest class in terms of automation of processing functions, standing at an average of 72%. Equity derivatives show the lowest degree of automation at 62%, although 91% of respondents said they would target this as an area for improvement over the coming year.

Robert Pickel, chief executive of Isda, highlighted the increased emphasis being placed on operational issues, adding: "During the year, Isda and its members have played a leading role in strengthening the operational infrastructure of the privately negotiated derivatives industry through our documentation, operational infrastructure and technology initiatives."

See also: Isda launches hardwiring supplement for CDS settlement auctions