Majority of major corporates using derivatives - Isda

An overwhelming majority of the world’s largest 500 companies use derivatives to hedge their risks, according to the first corporate derivatives survey by the International Swaps and Derivatives Association (Isda), published at the association’s 18th annual general meeting in Tokyo today.

The survey, which spanned companies in 26 countries, found that 92% use derivatives to manage and hedge their risks more effectively. Of these companies, 92% use derivatives to manage interest rate risk, 85% use them to hedge foreign exchange risk, 25% hedge commodity risk and 12% use derivatives to manage equity price risk.

UK-based corporates have the highest usage, with all 35 surveyed companies using derivatives. In the US, 94% of the 196 companies questioned said they use derivatives, the same percentage as German corporates. French and Japanese companies followed closely behind, with 92% and 91% respectively using derivatives.

"We weren’t very surprised by the results," said Keith Bailey, managing director of Merrill Lynch and chairman of Isda. "It is a very compelling endorsement of the product by the largest companies in the world, and shows it is very important to use derivatives in a competitive environment."

The survey will be released on an annual basis, and may include further information in future, including volumes outstanding and product breakdown.