OTC Derivatives Markets: Staging a Recovery

by Anshuman Jaswal, PhD, October 22, 2013
Industry Trends


The global OTC derivatives market has seen a recovery in the foreign exchange and interest rate markets. However, credit, equity, and commodity markets have not performed very well in the last few years.

OTC Derivatives Markets: Staging a Recovery analyzes the recent performance of the global OTC derivatives markets to understand how they have coped both before and after the crisis, and also considers the specific performance of each asset class.

Celent’s research indicates a linear trend for nonal outstanding, which has been rising in the last decade. The December 2012 outstanding is higher than the December 2010 level, although there has been a decline since June 2011. The current performance is close to the long-term trend line, and we believe that the market has stabilized since the financial crisis. Now the next big development will be the impact of OTC derivatives regulation.

“We seem to be seeing a more realistic and sustainable performance across the various asset classes in OTC derivatives,” says Dr. Anshuman Jaswal, Senior Analyst with Celent’s Institutional Securities & Investments Group and author of the report. “We can look forward to the impending move toward SEFs, and greater central clearing, to make the market more efficient and transparent.”

We begin the report with an analysis of the performance of the OTC derivatives markets for the various asset classes in terms of the notional amounts outstanding and gross market value. This is followed by the product breakdown for each asset class to understand the relative importance of the different OTC derivatives products. After this we consider the breakdown of volumes by different types of counterparties. Finally, we look at the maturities and the currency in which the derivatives are denominated for foreign exchange, interest rate, and equity derivatives.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Executive Summary




Market Overview




Leveraging Celent’s Expertise



Support for Financial Institutions



Support for Vendors


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