ISDA issues report on global derivatives usage and economic impact

Article summary

The International Swaps and Derivatives Association (ISDA) has issued a report, in collaboration with Boston Consulting Group (BCG), exploring how and why different types of firms use derivatives, the value these instruments bring to their business and the benefits to the broader economy. The report highlights that companies use derivatives for purposes such as risk transfer, liquidity management, and enhancing returns. This usage helps firms mitigate risk, stabilise financing terms, reduce costs, and improve financial performance, thereby enabling strategic investments and contributing to economic growth. The report also includes academic research showing that derivatives lead to lower cashflow volatility, reduced financing costs, higher returns, and increased investment capacity. Examples of derivative users include manufacturers, exporters, pension funds, energy producers, insurance companies, mortgage providers, banks, and asset managers.