It has been a fairly quiet last few days in the bank regulation world. Even the speech count out of the BIS is down to only a few this week. Despite that, there has been the release of the semi-annual derivative trading statistics. There were the, by now, usual large amounts of compound growth in totals outstanding. Credit default swaps were the largest growth market, with growth climbing from 36% to 46% in nominal face value terms. This would have been larger if early terminations had not also increased. The notional outstanding on these is now over USD 20 trillion (yes, with a “T”) – a very big number. This shows the true importance of this market now, up from virtually nothing only a little while ago.
Interest rate products were also up, with the Euro continuing to pull away from the USD denominated positions. I suspect this is being driven, at least partly, by the greater uncertainty there.
No real change in FX derivatives, though – the USD is still well and truly the largest traded currency, with 80% of all activity having one leg in USD, with the Euro trailing on 40%. No great surprise here as most international trade still takes place in USD.
Commodity and equity derivative growth is slowing but still healthy – 18% and 17% growth respectively.
Another interesting area is the Herfindahl indicies (these are a measure of market concentration). There are few dominant players in any of these markets, save Latin America and some possible concentration in the OTC Asian options market. These measures have been pretty stable for a while now, indiating the market is largely fully competitive – so, if you are buying, remember to shop around a bit.
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