OTC Rates Market Triples Since 2007
ISDA made a summary of a recent BIS paper on the OTC market. One highlight which is astounding is that the average daily turnover of OTC rates business has risen from$1.7trn per day in 2007 (pre-crisis) to $6.5trn per day. This suggests that the market reforms for capital, clearing and margining must be making OTC products ever more popular.
This paper highlights changes in the size and structure of global over-the-counter interest rate derivatives (IRD) markets from 2007 to 2019, using data from the Bank for International Settlements (BIS) Triennial Central Bank Surveys.
IRD average daily turnover, which measures market activity, more than doubled in April 2019 compared with April 2016. This rate of growth was considerably higher relative to prior periods.
US dollar-denominated contracts remained the most actively traded IRD in April 2019, having surpassed euro-denominated instruments in trading volume in April 2016. On a geographic basis, the UK took back its status as the largest global center for IRD trading, surpassing the US.