The year-end 2005 Market Survey, noted notional principal outstanding volume of CDS grew 39% to USD17.3 trillion. Interest-rate derivatives grew almost 16% to USD213.2 trillion year-on-year while equity derivatives outstanding grew 34% to USD5.6 trillion.
Preliminary results of a survey on post-trade processing of credit derivatives were discussed, revealing that for large firms the level of CDS confirmation backlogs has decreased from 23.5 to 16.2 days worth of business.
The 2006 ISDA Margin Survey reports the amount of collateral outstanding is estimated at USD1.439, a 19% annual increase.
Index residential property derivatives are gaining momentum, although single swaps on commercial property are still infrequent, said Guy Ratcliffe, head of property derivatives at Abbey Financial Markets. He tipped cross-country property swaps to be the next hot thing in Europe, with funds mainly invested in their home nation's property looking to diversify. There is also growing interest in residential property-index trading in Japan, he reported.
The 2006 Fund Definitions were also published for confirmations involving pooled investment vehicles including hedge funds and mutual funds. Tim Hailes, managing director and associate general counsel at JPMorgan, said the fund derivatives committee is also considering issuing a users guide and confirmation templates.
There may well be light at the end of the tunnel for fund-linked structurers in Europe: Bill Eldridge, public affairs director at Barclays, said the European Parliament appears to be taking a more favorable view on hedge-fund-linked mutual funds for retail—in UCITS form—than the Committee Of European Securities Regulators. He noted however, the parliament's report on the matter is due next week and with 150 amendments tabled, the industry will still have a while to wait for a final decision.
Membership has risen to over 700, with over 60 new firms added over the past year.
Lloyd Rich, director of logistics at GP Cellulose in Brunswick, Ga., expressed interest in the development of a global freight derivatives market, which is at a very early stage.
