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Isda AGM: Collateral use continues to rise

Over-the-counter derivatives traders have increased their use of collateral by 86% in the past year, according to a survey of banks and institutional investors released today by the International Swaps and Derivatives Association.

    • Joel Clark
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The worsening financial crisis has driven an increase in the use of collateralisation as a risk mitigation tool, with an estimated $4 trillion of collateral in circulation at the end of 2008, up from $2.1 trillion at the end of 2007. Cash represents 84% of collateral received and 83% of collateral delivered.

"Isda's margin survey indicates that, amid the volatility in the financial markets, collateral management programmes continue to expand, covering increased trade volumes and credit exposures," said Robert Pickel, executive director and chief executive of Isda.

The survey estimates more than 150,000 collateral agreements are now in place and respondents predict further growth of 26% during 2009.

See also: Isda AGM: Cautious OTC traders increase collateral use
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