Rate, Credit-Default Swaps Reduced by $200 Trillion, ISDA Says
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More than $200 trillion in notional value of interest-rate and credit-default swaps have been eliminated from the over-the-counter derivatives market by canceling offsetting trades, the International Swaps & Derivatives Association said.
So-called tear-up agreements are used to get rid of redundant trades in the privately negotiated market and help lower credit risk by paring the number of transactions that must be accounted for on a daily basis. Rate swaps have been reduced by $120 trillion and credit swaps by $82 trillion as of the end of 2011, ISDA said in an e-mailed statement today.