BIS: OTC Derivatives Market Value Falls

The Bank for International Settlements (BIS) sent me this new article link in their regular email update. It provides the latest information they have on the OTC derivatives market. They note a significant drop in this market value.

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"In the first half of 2017, the notional amount of outstanding OTC derivatives contracts retraced its earlier decline. Notional amounts rose from $482 trillion at end-December 2016 to $542 trillion at end-June 2017, close to their level of a year earlier. In contrast, their gross market value, which provides a more meaningful measure of market and counterparty credit risk, declined further in the first half of 2017, from $15 trillion to less than $13 trillion (Graph 1). The last time the gross market value of all OTC derivatives had been below $13 trillion was end-June 2007.

Gross credit exposures, which adjust gross market values for legally enforceable bilateral netting agreements (but not for collateral), also fell to their lowest level since 2007. They declined from $3.3 trillion at end-December 2016 to $2.8 trillion at end-June 2017."

Please click here to read the full article and see the relevant graphs

Below I have pasted in the full email update from the BIS

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December 2017 Can central banks talk too much? Central banks learn from market prices, and also influence market prices to steer the economy. Getting the balance right between talking and listening is important to avoid an echo chamber effect. CoCo issuance and bank fragility Larger and better-capitalised banks are more likely to issue contingent convertible capital securities (CoCos), the first comprehensive study of issuance shows. What makes a global bank systemically important? The Basel Committee has published the criteria, methodology and information used to update the 2017 list of global systemically important banks (G-SIBs).   Gross market values of OTC derivatives Over-the-counter derivatives market value falls In the first half of 2017, the market value of outstanding OTC derivatives contracts fell below $13 trillion to the lowest level in 10 years, partly reflecting higher long-term yields. House prices since the Great Financial Crisis Emerging market house prices have rebounded 6% since early 2016 and are now 17 percentage points above pre-financial crisis levels. Real residential property prices