BIS: OTC derivatives market activity in the second half of 2005

19 May 2006

The volume of over-the-counter OTC derivatives contracts outstanding continued to rise in the final half of 2005, albeit at a slowing pace. Notional amounts of all types of OTC contracts excluding credit derivatives stood at $285 trillion at the end of December, 5% higher than six months before. The growth in notional amounts was particularly strong in contracts on commodities (23%) and equities (11%), and more moderate in the much larger interest rate (5%) and foreign exchange (2%) segments of the market.

The following trends are noted in the statistical release:

Rapid growth in commodity and equity contracts

Slowing growth in interest rate products

Subdued activity in FX derivatives

Less rapid growth in credit default swaps

Concentration increases in smaller market segments.

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© Graham Bishop