Financial Markets

With the turmoil of the last 12 months or so, one would have thought this market would have cooled down ? In the second half of 2007, credit default swaps(newest wrinkle) grew 37%, while interest rate derivatives grew 10% and equity derivatives showed no growth. The International Swaps and Derivatives Association, at its Annual General Meeting in Vienna April 16, 2008 released the survey results for privately negotiated derivatives:

The notional amount outstanding of credit default swaps (CDS) grew 37 percent to $62.2 in the second half of 2007 from $45.5 trillion at mid-year. CDS notional growth for the whole of 2007 was 81 percent from $34.5 trillion at year-end 2006. The survey monitors credit default swaps on single names and obligations, baskets and portfolios of credits and index trades.

Recognised weaknesses in the system are hopefully being addressed:

“Developing tools to manage counterparty credit is an important feature of ISDA’s work. Equally important are our efforts to reinforce the operational infrastructure to enable scalable growth and improve and liquidity for the continued development of these important risk management tools.”

 Read the whole release here.