**ISDA®**

ISDA - INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC.

**NEWS RELEASE**

__For Immediate Release, Monday ,
October 25, 2010 __

**ISDA Provides Concentration Statistics on OTC Derivatives
Activity and Publishes Mid-Year 2010 Market Survey Results**

**HONG KONG, Monday,
October 25, 2010**
– At its 2010 Regional
Conference in Hong Kong, the International Swaps and Derivatives Association,
Inc. (ISDA) today provided new statistics regarding the concentration of OTC
derivatives activity among major market participants. Accompanying these
statistics, ISDA also announced the results of its Mid-Year 2010 Market Survey
of privately negotiated derivatives.

**Five Largest
US-Based Dealers Hold 37 Percent of Outstandings**

According
to ISDA’s Mid-Year 2010
Market Survey,
the total notional amount outstanding of interest rate, credit, and equity
derivatives at June 30, 2010 was $466.8 trillion. The five largest US-based dealers
reported a notional amount outstanding of $172.3 trillion, which is 37 percent
of the total amount. This contrasts with other reports in which the five largest
US-based dealers appear to hold 95 percent of outstandings
and dominate the OTC derivatives market. The difference lies in the fact that
the ISDA Survey takes into account the global scope and scale of the
derivatives business, while the other figures compare the five largest US-based
dealers to the total held only by US bank holding companies.

**G14 Holds 82
Percent of Outstandings**

According
to the ISDA Market Survey, the notional amount reported by the 14 largest international
derivatives dealers (the G14) was $354.6 trillion at the end of June 2010 after
adjusting for double counting of inter-dealer transactions. This represents 82 percent of the total
amount reported by all Market Survey respondents. Broken out by product type, the G14 held
$354.6 trillion of interest rate derivatives, which is 82 percent of all
interest rate derivatives reported; $23.7 trillion of
credit derivatives, which is 90 percent of all credit derivatives; and $5.5
trillion of equity derivatives, which is 86 percent of all equity derivatives.

**Mid-Year 2010 Market
Survey Results**

According
to the Survey, the total notional amount outstanding of OTC derivatives ($466.8
trillion) increased 1 percent from $463.9 trillion at the end of December 2009. Broken out by product type, the Survey
results were:

·
Interest rate
derivatives, which include interest rate swaps and options and cross-currency
swaps, grew by 2 percent to $434.1 trillion from $426.7 trillion at year-end
2009 (about 93 percent of the total amount).

·
Credit
derivatives decreased by 14 percent in the first six months of the year to
$26.3 trillion from $30.4 trillion (about 6 percent of the total amount). For the
purposes of the Survey, credit derivatives comprise credit default swaps
referencing single names, indexes, baskets, securitized obligations, and portfolios.

·
Equity
derivatives, which consist of equity swaps, options, and forwards, decreased by
6 percent to $6.4 trillion from $6.8 trillion at year-end 2009 (less than 2
percent of the total amount).

According to the Bank of
International Settlements (BIS), gross mark-to-market value of all derivatives
was approximately 3.5 percent of notional amount outstanding as of December
2009. In addition, net credit exposure (after netting but before collateral) is
0.6 percent of notional amount outstanding. Applying these percentages to the
total ISDA Market Survey notional amount outstanding of $466.8 trillion
as of June 30, 2010, gross credit exposure before netting is estimated to be $16.3
trillion and credit exposure after netting, but before collateral, is estimated
to be $2.7 trillion.

**Additional
Concentration Information**

As
noted above, the ISDA Market Survey reports the notional amount outstanding at
the G14 group ($354.6 trillion or 82 percent of total outstandings
at June 30, 2010). Broken out by product
type, the G14 held $354.6 trillion of interest rate derivatives, which is 82
percent of all interest rate derivatives reported; $23.7 trillion of credit
derivatives, which is 90 percent of all credit derivatives; and $5.5 trillion
of equity derivatives, which is 86 percent of all equity derivatives.

With
regards to interest rate derivatives, the ISDA concentration measure is similar
to a measure obtained using data from TriOptima’s OTC
Derivatives Interest Rate Trade Reporting Repository (IR TRR). The IR TRR collects transaction data on
interest rate derivatives from the G14 group and provides regulators with
monthly reports summarizing outstanding trade volumes and gross notionals as well as currency breakdowns and maturity
profiles by product type. According to the IR TRR, the notional amount
outstanding of interest rate derivatives held by the G14 group as of June 2010
was $343.2 trillion after adjusting for double counting of centrally cleared
trades. The difference between the IR
TRR amount and the ISDA amount is due mainly to the fact that the IR TRR data
cover a wider range of products but are adjusted for double counting of both
inter-dealer and cleared transactions, while the ISDA numbers are adjusted only
for inter-dealer double counting.

In order to measure the size of the
market beyond the G14 group, ISDA relies on the Bank for International
Settlements (BIS) Semiannual Derivatives Statistics. According to the
BIS, the notional amount outstanding of interest rate derivatives at year-end
2009 was $449.8 trillion. After reallocating the “unallocated” notional amounts
that capture gaps in the BIS sample and subtracting the double-counted cleared
trades, the BIS notional amount is $399.0 trillion.

Assuming
that the notional amount of interest rate derivatives grows at the same rate
that it did in the second half of 2009, the estimated BIS notional amount of
interest rate derivatives is $410.9 trillion. Of this amount, the $343.2
trillion amount held by the G14 group as reported in the IR TRR represents 83.5
percent. This is consistent with the 82
percent found using the ISDA Market Survey.

**About ISDA
Mid-Year 2010 Market Survey**

The ISDA Mid-Year 2010 Market Survey
reports notional amounts outstanding for the interest rate derivatives, credit
default swaps, and over-the-counter equity derivatives as of June 30, 2010. All notional
amounts have been adjusted for double counting of inter-dealer transactions.
ISDA surveys its Primary Membership twice yearly on a confidential basis. In
this survey, 70 firms provided data on interest rate swaps; 62 provided responses
on credit derivatives; and 61 provided responses on equity derivatives.
Although participation in the Survey is voluntary, all major derivatives houses
provided responses.

**About ISDA**

ISDA, which represents participants
in the privately negotiated derivatives industry, is among the world’s largest
global financial trade associations as measured by number of member firms. ISDA
was chartered in 1985, and today has over 830 member institutions from 57
countries on six continents. These members include most of the world’s major
institutions that deal in privately negotiated derivatives, as well as many of
the businesses, governmental entities and other end users that rely on
over-the-counter derivatives to manage efficiently the financial market risks
inherent in their core economic activities. Information about ISDA and
its activities is available on the Association's web site: www.isda.org.

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