Interest rate products dominate OTC derivatives growth in H1

The over-the-counter vanilla interest rate derivatives market grew 24% in the first six months of the year, to $123.90 trillion in notional outstanding, according to the International Swaps and Derivatives Association.

The growth alone in interest rate notionals represents almost nine times the value of the entire credit derivatives market, which itself grew 25% to $2.69 trillion and represents credit default swaps, baskets and portfolio transactions.

“The increase in interest rate derivatives outstanding reflects the need by market participants for risk management tools during a period of bond market and exchange rate volatility,” said Isda chief executive Robert Pickel. “At the same time, the continued strong growth in credit derivatives markets underscores the desire of firms around the world to manage their credit risk exposures more effectively,” he added.

Equity derivatives – including equity swaps, options and forwards, grew 14% to $2.78 trillion.

Isda surveys its primary membership – large dealers – for its data, which it then makes public on an aggregate basis.