Market participants traded more OTC interest rate derivatives in 2014, but in smaller sizes according to a review.
The International Swaps and Derivatives Association (ISDA) found that average daily notional volume fell from $588 billion in the first quarter of the year to $484.4 billion in the fourth quarter.
By contrast, trade counts rose from 3,622 to 3,800 over the same period.
This translates into a drop in the average size per trade from $162.3 million in the first quarter to $127.5 million in the last three months of the year.
“Our research shows the impact of regulatory reforms on derivatives trading volumes,” said Scott O’Malia.
Most standardised interest rate swaps are now being cleared in line with new regulations aimed at reducing systemic risk.
In the US, interest rate and credit default swaps are being executed on electronic trading platforms known as swap execution facilities (SEFs).
The uptake of SEFs is also increasing according to ISDA, accounting for 52.4% of average daily notional volume in interest rate derivatives versus 19% in 2013.
Buy-side participation on SEFs still represents an area in need of growth, with more liquidity on the central limit order books being touted as a key to unlocking that potential.