Revenues in the fourth quarter were positive, however, for the top 9 banks that conduct 94 percent of derivatives activities. This decline is mostly the result of a decline in interest rates and a decline in various market volatilities in the fourth quarter as well as the continuing use by banks of bilateral netting to reduce credit exposure. This slight decline is consistent with a pattern of stabilizing or declining notional amounts in previous fourth quarter figures. The number of banks holding derivatives declined by 37 in the fourth quarter, to 558 banks. Nine banks account for 94 percent of derivatives activity.
Banks continue to maintain relative balance in their exposure to market risk.
This risk is measured by positive and negative fair values of derivatives portfolios. Relatively balanced bank books mean that the value of positions where the bank could have a gain do not significantly differ from the positions where the bank could have a loss. Both types of securities showed appreciation in the aggregate during the fourth quarter stemming mostly from the decline in interest rates during the quarter. Structured notes were held by 4,273 banks in the fourth quarter, a decline of 110 from the third quarter. Its mission is to ensure the safety and soundness of the national banking system.