OTC derivatives trade grows in 2010 despite crackdown -ISDA

* OTC derivative trades up 1 percent

* Interest rate derivatives up 2 pct in first half of 2010

* Credit and equity derivative trades fall

* Top five U.S. dealers control 37 pct of the total volume

By Daisy Ku

HONG KONG, Oct 25 (BestGrowthStock) – The outstanding amount of
over-the-counter derivatives rose during the first half of 2010
despite calls by regulators to move much of the market on to
exchanges, the International Swaps and Derivatives Association
said on Monday.

The ISDA said the total notional amount outstanding of OTC
derivatives amounted to $466.8 trillion as of June 30, up 1
percent from the end of 2009.

Global regulators are trying to make derivatives trading
more transparent after the opacity of the OTC market was blamed
for the near-collapse of U.S. insurer AIG (AIG.N: ) in 2008.
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The Financial Stability Board (FSB) last week, ahead of a
G20 finance ministers’ meeting in Seoul, recommended ways to
ensure that as many contracts are standardised so they can be
centrally cleared and traded on exchanges. [ID:nTOE69J086]

Figures from the ISDA would indicate that the regulatory
process is only just beginning, with the OTC market continuing
to grow.

The bulk of the increase was focused in the huge market for
interest swaps, with trade in the smaller equity and credit OTC
derivatives slipping.

The notional amount outstanding of interest rate swaps,
options and cross-currency swaps grew by 2 percent to 434.1
trillion in the six months, from $426.7 trillion at the end of
2009, while volumes in credit derivatives and equity
derivatives were down 14 percent and 6 percent, respectively,
according to ISDA mid-year market survey.

The ISDA survey also revealed that OTC derivatives at the
14 biggest international derivative dealers, known as the G14,
was $354.6 trillion, representing 82 percent of the total
volume reported.

The top five U.S.-based dealers held 37 percent, or $172.3
trillion worth of OTC derivatives, according to the survey.
(Reporting by Daisy Ku; Editing by Rachel Armstrong)

OTC derivatives trade grows in 2010 despite crackdown -ISDA