Bank for International Settlements – BIS

Turnover in interest rate derivatives markets has surged by 87% to $25 trillion per day between April 2022 and 2025. In the latest BIS Quarterly Review, Torsten Ehlers and Karamfil Todorov argue that the uncertainty over the trajectory of monetary policy spurred trading in these contracts that are used to hedge movements in short rates. Another key part of the backdrop was that government bond issuance rose at the same time as quantitative tightening by central banks expanded the amount of government debt to be absorbed by private investors. Hedge funds have come in as marginal buyers, holding leveraged positions in government bonds and hedging the price risk by entering a matching short position using the futures market in government bonds. Emerging market economy interest rate derivatives also expanded rapidly, but challenges like the absence of government bond futures and the complex geography of clearing remain. Read the full report: https://lnkd.in/eDF_AMzR #BISQuarterly

Trading in both FX and interest rate derivatives markets surged in April 2025, according to the BIS Triennial Survey. What drove these increases and what do they mean for the global financial system? The December BIS Quarterly Review is a special edition delving into the data collected from more than 1,000 banks in 52 jurisdictions, uncovering the wider trends and structural shifts at play in markets. Watch the highlights in our video with Hyun Song Shin, Andreas Schrimpf Goetz von Peter: Read more in the latest Quarterly Review: https://bit.ly/4475foD

The Basel Committee on Banking Supervision has published principles for the sound management of third-party risk in the banking sector. Banks’ increased dependency on third-party service providers means that the traditional concept of outsourcing must evolve to encompass a broader range of third-party arrangements. The principles set a common baseline for banks and supervisors in managing risks associated with third-party providers, while allowing sufficient flexibility to adapt to evolving practices and regulatory frameworks across jurisdictions. Read the report: https://bit.ly/4iNqX71 #BaselCommittee #BaselIII

Project Rialto has successfully demonstrated it is technically feasible to connect non-tokenised payment systems to tokenised foreign exchange (FX) and settlement to improve cross-border payments. The experiment, run by the BIS Innovation Hub, the Banque de France, Banca d'Italia, Bank Negara Malaysia (central bank of Malaysia) and the Monetary Authority of Singapore (MAS), explored how settlement in tokenised central bank money could enhance instant cross-border payments carried out through the traditional banking system. Project Rialto targeted FX and settlement-related frictions by enhancing interlinked instant payment systems with settlement on a cross-border distributed ledger technology network. It combined payment-versus-payment with settlement in tokenised central bank money and an automated FX mechanism. Read the technical report here: https://bit.ly/3Mn0gtX #FX #Tokenisation #CrossBorderPayments #BISInnovationHub

Average daily turnover in global FX markets reached $9.5 trillion in April 2025, up 27% from April 2022. Drawing on the 2025 BIS Triennial Survey results, Wenqian Huang, Ingomar Krohn and Vladyslav Sushko show that currency hedging took centre stage in global FX markets in April, amid US tariff announcements, a sliding dollar and a breakdown of its historical correlation with risky assets. The preconditions set by global monetary policy tightening since 2022, which had raised hedging costs and incentivised many investors to reduce currency hedge ratios, amplified these developments. Turnover thus surged in FX derivatives as these were used to adjust exposures to currency risk on existing positions, such as forwards and options. By contrast, FX swap turnover increased only modestly, due to trading with institutional investors while interbank trading in FX swaps has been stagnant. Read the full report: https://lnkd.in/evZHMezj #BISQuarterly

Despite volatility flare-ups triggered by broader policy uncertainty and stretched equity valuations, global equity markets held ground and reached new highs in the period to 28 November. Valuations of risk assets were pushed to historic highs, prompting questions about the consequences of any swing in investors’ sentiment. Credit markets also showed resilience to mounting wariness over highly publicised bankruptcies and potentially wider concerns about asset quality. In the early part of the review period, gold prices surged alongside those of other risk assets, defying their historical underperformance during risk-on phases. #BISQuarterly Read more at: https://bit.ly/44GoBkx

The December BIS Quarterly Review is a special edition analysing the results of our Triennial Survey, a snapshot of activity in FX and interest rate derivatives markets in April 2025. In the latest episode of our BISness podcast, Hyun Song Shin, Andreas Schrimpf and Goetz von Peter explain what went on in these markets during this period of heightened policy uncertainty, the more long-term trends that were uncovered and what these changes mean for the global financial system. Goetz von Peter on the size of markets: “Derivatives markets are truly huge. If you look at turnover – that is, the flow of transactions over time – we’re talking about 30 times global GDP or about 70 times global trade.” Andreas Schrimpf on the increase in FX trading: “Some telling signs and the patterns of the instruments traded indicated that it had a lot to do with hedging.” Hyun Song Shin on hedge fund leverage: “[We can see] how sharply the elastic band would snap back if something happened. The more leveraged you are, the tighter you’re pulling the elastic band. And so the prescription here would be ‘make sure that you don’t tighten it so hard that it’s going to snap back really hard’.” Listen to the episode on your favourite podcast platform. Apple: https://apple.co/3KDHihW Spotify: https://bit.ly/4rKiZzH

The BIS Quarterly Review is out #BISQuarterly Review #InflationExpectations #Derivatives #BISStatistics #BISTriennialSurvey Explore the Quarterly Review: https://bit.ly/4475foD

Stay tuned! The #BISQuarterly will be out on 8 December with analysis on developments in FX and interest rate derivatives markets, based on our #BISTriennial Survey results. https://bit.ly/4imcP3V

The Basel Committee on Banking Supervision today published a consultative document proposing additions to its disclosure standard to make the data disclosed by banks available in a machine-readable format. Pillar 3 disclosures by internationally active banks under the Basel Committee’s standards are an important source of their key risk metrics. Most banks, however, currently publish their disclosures in PDF format only, which makes it difficult to aggregate, process and compare data across banks. To make Pillar 3 disclosure data more accessible, the Committee is proposing that they should be made available in standardised machine-readable formats across its member jurisdictions. Comments are welcome by 5 March 2026. Read more here: https://bit.ly/4phHQcq