financial instruments chart, derivaties

Over-the-counter (OTC) derivatives activity surged in the first half of 2019, according to the latest data from the Bank for International Settlements (BIS).

The BIS reported that notional amounts of OTC derivatives rose from $544 trillion (all figures in U.S. dollars) at the end of 2018 to $640 trillion at the end of June.

Part of the increase reflects normal seasonality. But even accounting for this, notional amounts are up, reaching their highest level since 2014.

Interest rate derivatives are driving the increase in notional amounts, the BIS said.

Foreign exchange derivatives are also up, but notional amounts of other types have been declining since the financial crisis, it says, led by credit derivatives.

The gross market value of OTC derivatives also rose in the first six months of 2019, the BIS said, rising from $9.7 trillion to $12.1 trillion over the first half.

The increase in market value was primarily driven by euro-denominated interest rate derivative contracts, it said, although U.S. dollar contracts also rose.

The gross market value of foreign exchange and credit derivatives remained relatively stable in the first half of 2019, the BIS said.

And, it reports that gross credit exposures also rose in the first half of 2019.

This is the first time gross credit exposures increased since mid-2016. Yet, as a share of gross market value, gross credit exposures are down from 24% to 22% over that period.