Over the last decade, the size and structure of the global credit default swap (CDS) market have
changed markedly. The Bank for International Settlements documents how outstanding
amounts have fallen, central clearing has risen and the composition of underlying credit risk
exposures have evolved with the help of derivatives statistics.
Netting of CDS contracts has increased, due to the combination of a higher share of standardized index products and the clearing of such contracts via central counterparties. In turn, this has led to a further reduction in counterparty risk. Underlying credit risks have shifted towards sovereigns and portfolios of reference securities with better credit ratings. The distribution of credit risks across counterparty categories has remained broadly unchanged.