Use of collateral in derivatives up 60 pct -ISDA

LONDON, April 16 (Reuters) - The amount of collateral used in private derivatives transactions rose 60 percent in 2007 to $2.1 trillion, the International Swaps and Derivatives Association said on Wednesday.

Cash is the most common form of collateral, ISDA said, based on a survey of 107 firms, of which 85 were banks or broker-dealers.

The credit crisis that started last year has put into sharp focus the importance of collateral in derivatives markets, with fears arising of losses cascading through the system if a counterparty failed to make a required payment.

ISDA said that for all over-the-counter derivatives trades, 63 percent were subject to collateral agreements, versus 59 percent in 2006.

"ISDA's 2008 Margin Survey reflects continued importance of collateralisation as a risk mitigation tool and the effectiveness of collateral agreements," said Robert Pickel, ISDA's chief executive director. (Reporting by Richard Barley, editing by Will Waterman)