Derivatives growth slows during first half, say BIS

The total notional value of outstanding OTC derivatives was $270 trillion, up 7% between December 2004 and June 2005.

The markets saw rapid growth in notional volumes of equity and commodity derivatives, although these still represent a small proportion of total OTC volume. The total outstanding market value of equity derivatives was $5.1 trillion and $7.1 trillion for commodity derivatives.

Interest rate products continued to dominate the OTC market, representing $204 trillion in notional value. The largest category remains euro-denominated products ($76 trillion notional volume), although US dollar products grew sharply to $72 trillion in notional.

The BIS said Mexican peso derivatives have seen impressive development due to growing foreign investment in Mexican bonds. This has sparked a rise in demand for more derivatives products such as cross-currency swaps.

Meanwhile, credit default swap volumes rose 60% to $10.2 trillion during the first six months of the year with most having lifespans of between one and five years.

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