The International Swaps and Derivatives Association's (Isda) margin survey on the use of collateral in the OTC derivatives business has revealed that estimated total collateral in circulation related to non-cleared OTC derivatives decreased 14% last year, from $3.7trn at the end of 2012 to $3.2trn due to mandatory central clearing.
 
The use of cash and government securities continues to account for roughly 90% of non-cleared OTC derivatives collateral. Cash received as a percentage of total collateral has decreased versus 2013, while cash delivered has remained relatively stable.
 
The number of collateral agreements (those with exposure and/or collateral balances) supporting non-cleared OTC derivatives transactions totalled 133,155 at the end of 2013, of which roughly 87% are Isdaagreements. A similar percentage of non-cleared OTC derivatives collateral agreements relate to portfolios of less than 100 trades, with only 0.3% involving portfolios of more than 5,000 trades.
 
The use of collateral agreements is substantial. Among firms responding to the survey, 91% of all OTC derivatives trades (cleared and non-cleared) were subject to a collateral agreements at the end of 2013. Responding firms also indicated that 90% of non-cleared OTC derivatives trades were subject to collateral agreements at the end of 2013, marking a 20% increase versus the previous year.
 
On an asset class basis, 97% and 86% of bilateral transactions involving credit and fixed income derivatives respectively are performed under a credit support annex (CSA) or collateral agreement.
 
Portfolio reconciliation frequency has increased for larger portfolios, with daily reconciliation increasing 5% for portfolios consisting of 100-499 trades at the end of 2013 compared to the end of 2012. Eighty-four percent of large firms surveyed indicated they reconcile their portfolio mix on a daily basis.