Who uses privately negotiated derivatives such as credit default swaps?
Privately negotiated (or over-the-counter) derivatives are used by a large number of American companies to manage various risks that arise in connection with their businesses. According to ISDA’s 2009 survey of derivatives usage by the world’s 500 largest companies, 94 percent of these companies use privately negotiated derivative instruments to manage and hedge their business and financial risks. The companies included in the survey are headquartered in 32 different countries and represent a broad range of industries from basic materials to office equipment to retail and health care. The survey found that foreign exchange derivatives are the most widely used instruments (88 percent of the sample), followed by interest rate derivatives (83 percent) and commodity derivatives. Usage of foreign exchange and interest derivatives was fairly uniform across all industries (outside of financial services, 72 to 92 percent of all companies report using foreign exchange derivatives—the figure is
