Banks Increase Holdings in Derivatives
By BEN PROTESS
NYT
Even as federal regulators ratchet up scrutiny of the derivatives market, Wall Street is diving deeper into the $600 trillion industry, a new government report found.
The banking industry in the second quarter raised its stake in derivatives more than 11 percent from the same period a year earlier, according to the report by the Comptroller of the Currency, the federal agency that regulates national banks. Banks now hold nearly $250 trillion of the contracts, primarily futures and swaps, which derive their value from an underlying asset like an interest rate or a bundle of mortgages.
The nation’s four biggest banks — JPMorgan Chase, Citigroup, Bank of America and Goldman Sachs — are the biggest players, holding roughly 95 percent of the industry’s total exposure to derivatives. JPMorgan, which holds the most among commercial banks, carries some $78 trillion worth of derivatives on its books, according to the report. Citi is next on the list, with $56 trillion, up from $54 trillion in the first quarter.
“Derivatives activity in the U.S. banking system continues to be dominated by a small group of large financial institutions,” the report noted. While the number of banks holding derivatives increased modestly to 1,070, 99 percent are held by only 25 banks.
(More here.)
NYT
Even as federal regulators ratchet up scrutiny of the derivatives market, Wall Street is diving deeper into the $600 trillion industry, a new government report found.
The banking industry in the second quarter raised its stake in derivatives more than 11 percent from the same period a year earlier, according to the report by the Comptroller of the Currency, the federal agency that regulates national banks. Banks now hold nearly $250 trillion of the contracts, primarily futures and swaps, which derive their value from an underlying asset like an interest rate or a bundle of mortgages.
The nation’s four biggest banks — JPMorgan Chase, Citigroup, Bank of America and Goldman Sachs — are the biggest players, holding roughly 95 percent of the industry’s total exposure to derivatives. JPMorgan, which holds the most among commercial banks, carries some $78 trillion worth of derivatives on its books, according to the report. Citi is next on the list, with $56 trillion, up from $54 trillion in the first quarter.
“Derivatives activity in the U.S. banking system continues to be dominated by a small group of large financial institutions,” the report noted. While the number of banks holding derivatives increased modestly to 1,070, 99 percent are held by only 25 banks.
(More here.)
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