Bilateral compression takes off as banks tackle leverage

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Dealers have always measured the size of the over-the-counter derivatives market on a net basis – $3.9 trillion as of June 2013, according to the latest figures from the Bank for International Settlements. The reasoning is sensible, but it's also convenient, because it ignores the layers of offsetting trades that have accreted over time, giving the market its more widely used, and alarming, gross value of $693 trillion.

"Derivatives traders, historically, have been lazy individuals," says a risk

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