This survey of trading and derivatives-related disclosures focuses on the 1993-1995 annual reports of 67 banks and 12 securities firms, representing a sample of large, internationally active institutions in the G-10 countries (summarised in Tables 1-6). The 1995 results also include two Hong Kong securities firms. These are reported separately in the last column of Tables 2-6 (not aggregated with the G-10 countries because only 1995 financial statements were reviewed). For the most part, the institutions reviewed represent the largest banks and securities firms involved in derivatives in their countries, as measured by the total notional amounts of derivative instruments. The institutions reviewed are listed in Table 1, which presents the notional amount of the institutions' off-balance-sheet derivatives positions in the national currency and in US. dollars at the closing date of the financial statements.

As was noted in last year's survey, the tabulation of disclosures is in part a subjective exercise and the review required criteria and judgements to determine whether or not an institution had made a particular disclosure. For example, one bank or securities firm might explicitly provide certain quantitative information, whereas in another bank's or securities firm's annual report, similar information might only be inferred from other complementary data. For purposes of this analysis, indirect communication of information was generally not included in the tables.

While the information on trading and derivatives disclosures included in Tables 2 through 6 is extensive, the tables are not intended to imply recommendations for "best practice" disclosures. The tables instead provide a relatively comprehensive overview of the types of trading and derivatives-related disclosures of large, internationally active banks and securities firms and the evolution of such disclosures over the 1993-1995 period. The Committees believe that the survey should provide an important input to support banks' and securities firms' continued efforts to develop meaningful disclosures in this area.

For the vast majority of the institutions reviewed, disclosure about trading and derivatives activities is provided on a consolidated basis and appears in two main places in the annual report:

Management's discussion and analysis: This is an analysis of the firm's financial condition and performance (including financial data) that typically includes a narrative of the firm's risk exposures and techniques for managing risk. This part of the annual report is not typically audited by independent accountants. In some countries, this portion of the annual report may be referred to as the financial review or management report.

Annual financial statements: These financial statements generally include the statements of financial position (balance sheet), income, changes in stockholders' equity and changes in financial position or cash flow. Footnotes, which present information on financial statement line items in narrative and tabular form, are also considered to be a part of the financial statements. The annual financial statements and their footnotes are audited by independent accountants.

This survey considers disclosures in both of these areas of the annual report.

The remainder of this report presents in greater detail developments in qualitative and quantitative disclosures of trading and derivative activities since 1993. In reviewing quantitative trading and derivatives disclosures, the report addresses information about gross position indicators, credit risk, market risk and earnings. Market risk and earnings information is broken down by trading and non-trading (e.g., end-user) activities. The qualitative and quantitative information is summarised in Tables 2-6 at the end of this section.