The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

People Like Derivatives

This article appears courtesy of Institutional Investor

Source: InstitutionalInvestor.com

Two new reports show that the derivatives market continues to grow apace.

In its third annual global credit derivatives survey, released this morning, Fitch Ratings reports that the market in credit derivatives it surveys grew 86% $5.3 trillion.

"The market continues to grow at a phenomenally fast rate," Fitch analyst Roger Merritt said. "And we're not necessarily capturing the whole market, so the actual size of the market might be anywhere from $8 trillion to $12 trillion, which means it might actually be bigger than the corporate bond market."

The fastest growth, according to Fitch, was among "other" products, including indexed products and collateralized debt obligations, up 425%. Single-name CDS rose 88% and portfolio products 48%.

Banks remained a major player, transferring some $427 billion of risk off their balance sheets to insurance companies, other banks and hedge funds. "Hedge funds represent about 30% of the trading volume in the credit derivative market," according to Merritt. "A lot of the flows are going into hedge funds."

Echoing those findings, the Bank for International Settlements said yesterday that the credit derivatives market grew by 16% to hit a record $11 trillion in market value in the first half of 2005.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree