Credit Derivatives Market Expands to $17.3 Trillion

From Bloomberg:

Credit-default swaps, which pay compensation in the event of borrowers defaulting on their debt, expanded 105 percent in the full year, leading an increase in the $236-trillion market for derivatives, or contracts based on underlying assets. The market’s growth was slower than 123 percent increase in 2004, ISDA said in a report today at its annual meeting in Singapore.
Regulators are worried that credit derivatives are increasing too quickly for banks to control. The Federal Reserve Bank of New York has demanded action to tackle a backlog of contracts left unsigned for weeks or months, and for banks to address a shortage of bonds to settle contracts.

Weeks or months?

Posted by Eddy Elfenbein on March 15th, 2006 at 6:13 am

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