Tuesday, September 29, 2009


Felix Salmon of Reuters has crunched some numbers from the OCC and reports the following results of a comparison of nominal derivatives exposure of end users — the people for whom derivatives are meant to exist — and for dealers.

"[W]hile end-users have pared their derivatives exposure to a seven-year low, dealers have increased theirs to yet another all-time high. And as the OCC notes, when we say "dealers", we really mean four banks in particular: JP Morgan Chase, Goldman Sachs, Bank of America, and Citibank.

Oh, and did I mention? The amounts here are in trillions.

Year/ End Users/ Dealers/ Ratio
2003/ 2.6/ 62.4/ 24.0
2004/ 2.5/ 76.9/ 30.8
2005/ 2.5/ 96.2/ 38.5
2006/ 2.6/ 110.1/ 42.3
2007/ 2.6/ 138.1/ 53.1
2008/ 2.8/ 163.9/ 58.5
2009/ 2.4/ 187.6/ 78.2

What has happened in recent years that derivatives dealers now need $78 in nominal derivatives exposure for every $1 in end-user exposure?"

See the following post...

1 comment:

  1. Wipeout by the Surfaris seems appropriate here.

    Why so much in derivatives? It's like insuring a home in Malibu that you don't own in front of a wind-driven fire.