I think it'd be very hard to find the source of the above figure published. " Low end estimate $630 Trillion. High end estimate 1,200 Trillion. (For all derivatives, without mentioning what year.)"
It seems for USA alone, about $32 Trillion for options these years. $200 to $230 trillion for all derivatives. No idea roughly about the global figure - such as it would be how many times of the US total. Q Quarterly Report on Bank Derivatives Activities http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq315.pdf (on Page 14) http://www.occ.gov/topics/capital-m...derivatives/derivatives-quarterly-report.html In $ Billions 2014 Q4 2015 Q3 Futures & Forwards 43,368 38,988 Total Options 32,403 32,317 Total Swaps 135,170 (61%) 112,698 (59%) Credit Derivatives 9,449 8,198 Total Derivatives Notionals 220,390 (100%) 192,201 (100%) UQ
Q http://www.bis.org/statistics/about_derivatives_stats.htm Derivatives statistics The BIS compiles and publishes one set of statistics on exchange-traded derivatives and two sets on over-the-counter derivatives markets. Exchange-traded derivatives The exchange-traded derivatives statistics complete the coverage of the derivatives markets by providing information about the size and structure of organised futures and options markets. The statistics are compiled by the BIS from commercial data sources, and capture the turnover and open interest of interest rate and foreign exchange derivatives traded on derivatives exchanges. Semiannual OTC derivatives statistics The semiannual survey is conducted under the auspices of the Committee on the Global Financial System and provides information about the size and structure of the largest OTC derivatives markets. It captures notional amounts outstanding, gross market values, gross credit exposures and Herfindahl concentration measures. Central banks and other authorities from the following 13 jurisdictions currently participate in the survey: Australia, Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States. Triennial OTC derivatives statistics The Triennial Central Bank Survey enhances the semiannual survey by collecting data from a much broader sample of derivatives dealers - as many as 53 jurisdictions participate in the survey. Like the semiannual survey, the Triennial Survey captures notional amounts outstanding and gross market values. In addition, it captures turnover in OTC interest rate and foreign exchange derivatives markets. UQ Q Exchange-traded derivatives statistics Updated 6 December 2015 Global tables D1 Exchange-traded futures and options by location of exchange http://www.bis.org/statistics/d1.pdf UQ Q Semiannual OTC derivatives statistics Updated 6 December 2015 Global OTC derivatives market In billions of US dollars All contracts - Notional amounts outstanding H2 2013 H1 2014 H2 2014 H1 2015 710,633 691,640 629,142 552,909 - Gross market value H2 2013 H1 2014 H2 2014 H1 2015 18,825 17,438 20,878 15,521 Part A. Foreign exchange, interest rate, equity linked contracts http://www.bis.org/statistics/d5_1.pdf Part B. Commodity contracts, credit default swaps http://www.bis.org/statistics/d5_2.pdf UQ
For OTC contracts (total 553), roughly 70% are swaps (37+24+320+1+15=400); about 8% are options (13+40+0.5=44).
OddTrader, I think you are failing to understand the math behind swaps. Swaps are just a exchange of interest payments that are benchmarked against a notional amount. The notional amount is not really that relevant. It more or less just gives the size of the overall economy. Quoting the notional amount is not the same as quoting the notional amount say of an FX trader on ET who is using 50 to 1 leverage where they have 1k up in margin but could lose 50k. Swaps are not marginable in that context. As the economy grows, so will the size of the swap market.
People trading with interest rates background would think swaps is not risky. But the report says the opposite. My view is normally the markets should be OK, when behaving normal. But black swan will appear and there is a systemic risk that no any single market could avoid. The source of the systemic risk could be interest rates itself one day. That nobody would believe today! Otherwise, we don't call it black swan! Q June 2014 http://researchbriefings.files.parliament.uk/documents/SN06306/SN06306.pdf Summary This note summarises the issue of ‘mis-sold’ business loans. The loans in question were attached to interest rate guarantees which, following the dramatic falls in interest rates since the financial crisis, have left borrowers paying much more for their loans than they would otherwise have done. ... 1. Introduction A growing number of individual complaints and media interest in interest rate swaps suggests that a new ‘financial scandal’ may be brewing. A combination of possibly poorly understood and complicated financial contracts, combined with an extraordinary economic backdrop, has left some small businesses in particular with what they see as crippling interest rates at a time when the rest of the economy is enjoying record low interest rates. ... Can customers terminate their interest rate swaps early? It is possible for a customer to terminate their swap early; however, and as with fixed rate commercial mortgages, doing so incurs the cost of the difference between the interest rate on the contract and what interest rates are predicted to be for the remaining life of the transaction. This is known as the break cost . It is also important to note that it may also be possible to terminate a product in part or to restructure it to account for any change in a client’s circumstances.2 In the Radio 4 programme cited above, the banks and industry specialists say that: all the features of the swap contract were made clear to their customers; the customers understood what they were doing and subsequent claims that they did not are typical in cases where someone has made a wrong judgement and lost out as a result; customers were advised to seek independent advice before agreeing to a contract; customers were not forced to take out a contract; and customers were not advised to take out a contract UQ
Q Wall Street Confidence Trick: The Interest-Rate Swaps That Are Bankrupting Local Governments Wednesday, 21 March 2012 00:00 http://www.truth-out.org/news/item/...-swaps-that-are-bankrupting-local-governments Far from reducing risk, derivatives increase risk, often with catastrophic results. -Derivatives expert Satyajit Das, Extreme Money (2011). --- (long article) UQ
Q Cities Paying Millions to Get Out of Bad Bank Deals http://www.governing.com/topics/finance/gov-chicago-paying-millions-bad-swap-deals.html Chicago is the latest example of the many local and state governments that are haunted by interest rate swap agreements they made before the Great Recession. by Liz Farmer | March 6, 2015 When the Great Recession delivered the biggest blow to government budgets this side of World War II, it wasn’t just slashing revenue streams -- it also made certain financing agreements more costly in the long run. The agreements are called interest rate swaps, a holdover from the years leading up to 2008 when the booming market made even risky investments seem like a good idea. But in reality, these financing agreements with banks have come back to haunt governments following the financial markets crash and severe drop in interest rates. Last week, Chicago became the latest example when a credit rating downgrade by Moody’s Investors Service triggered a potential $58 million penalty for the fiscally beleaguered city. Penalties related to ratings downgrades are common in swaps, says Municipal Market Analytics Partner Matt Fabian. But typically, the ratings floor is well below the government’s rating at the time of the deal. ... ... ... UQ
Q 2010 AIRLINE BANKRUPTCY: THE DETERMINING FACTORS LEADING TO AN AIRLINE’S DECLINE http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1088&context=cmc_theses UQ
Q 2010 DERIVATIVES AND BANKRUPTCY : THE FLAWED CASE FOR SPECIAL TREATMENT https://www.law.upenn.edu/journals/jbl/articles/volume12/issue1/Lubben12U.Pa.J.Bus.L.61(2009).pdf UQ