Are Exchange-Traded Futures Poised to Revolutionize the Credit Derivative Market?
Futures Industry magazine: The credit derivatives market is one of today’s most important over-the-counter markets. The growth of the market has outperformed all expectations, rising from a notional value of $5 trillion in 2004 to over $20 trillion in 2006, according to the British Bankers Association. This phenomenal growth in the size of the market has been matched and to some extent driven by the array of new credit derivative products; index trades, tranched index trades and options on credit default swaps to name just a few. Furthermore, the market is soon to enter the next phase of its evolution, exchange-traded credit derivative futures. On March 27, Eurex is set to launch the world’s first exchange-traded credit derivatives contract, a future based on the Itraxx Europe index, the most widely traded index in the over-the-counter market. Depending on market demand and sufficient OTC market maker support, Eurex will also list futures contracts on the Itraxx HiVol and Itraxx Crosso
