ISDA 1Q15 Derivatives Survey

fragmented market SEF

ISDA 1Q15 Derivatives Survey


It’s May 2015, almost 8 ½ years since the Great Credit Crisis began and ISDA did their 1Q15 survey of market participants.  With Dodd-Frank bills have been passed; procedures have been implemented and processes have changed.


The survey includes 376 respondents. Respondents did not have to answer every question – only those questions that applied to them.  out of 376 respondents, 286 (76%) answered enough questions to make them statistically significant


31%    Financial Institutions             (118)

                              22%   Non-Financial Corps               (83)

                              6%     Governments                             (23)

                              6%     Energy Companies                  (22)

                              11%    Other                                            (40)

                76%    Total                                           (286)

                           Location:                                    Europe (145) and the Americas (191)


In answer to how much volume a respondent executes:

  • 22.60% trade between 101 –500 contracts
  • 32.15% trade between 0 – 100 contracts
  • 36.24% trade more than 500 contracts


In answer to whether they were impacted by the choices of Swap Execution Facilities (SEF’s) and lack of similarity of local laws around the global

  • 69.4% said yes
  • 37.6% said no
  • 7.90% said no, the market is not fragmenting

If answered “yes” above, what impact, if any, is it having on your firm’s ability to manage risk?

  • 52.4% Negative impact
  • 4.00% Positive impact
  • 24.1% No impact



Questioned as to whether the respondent experienced any changes in liquidity over the past year (i.e.: number of dealers; width & depth of bid/ask spreads; availability of certain products):        

  • 6%                       Liquidity improved
  • 22.6%                 Liquidity unchanged
  • 36.2%               Liquidity deteriorated
  • 35%                     Not sure/No opinion



To the question have hedging costs changed over the past year, ISDA received replies as follows:

  • 12%                   Costs increased substantially
  • 41%                   Increased a little
  • 28%                    Not sure/No opinion
  • 3.5%                   Decreased a little
  • .30%.                  Decreased  substantially 

Has the number of derivatives dealers willing to offer your firms derivatives prices changed over the past year?

  • 91.61%                  No change in dealers (30.54%)
  • 34.43%                  Fewer dealers (34.43%)
  • 26.64%                  Not sure/no opinion (26.64%)


If you believe that liquidity has deteriorated, then what impact, if any, is it having on your ability to manage risk?

  •  64.8%                 Negative impact
  • 34.33%                No impact/No opinion
  • .82%                      Positive impact


How important are derivatives of your risk management strategy?

  • 53.9%                  Very important
  • 35.53%                  Important
  • 10.18%                   No opinion / Not important

In what ways are derivatives important to your firm’s business and investment decision-making? (Check all that apply)

  • 66.7%            Manage exposures to improve pricing, operating expenses & returns
  • 41.74%            Hedge exposures in international markets to maintain enhance our competitiveness
  • 37.84%           Reduce financing costs & managing the cost of capital to invest in the business
  • 27.63%           Hedging risks of new activities and investments can invest for growth

Do you expect the use of derivatives will increase, decrease or stay the same in the 2Q15?

  • 16.31%                  Think usage increase
  • 77.34%               Stay the same/No opinion/Not sure
  • 6.34%                    Think usage decreases

The was the wisdom of the ISA respondents. I look forward to hearing the FIA’s SEF Trackers. SEFs have been creating a bit of execution fragmentation, making it difficult to gain any traction. But more on that in another blog


TAGS: Asset ManagersbanksCost of Derivatives ReformISDA 1Q15 end-user survey


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