Hedge fund credit derivatives trading surges, says BBA

Hedge funds are expected to have a greater share of the credit derivatives market than securities firms by 2006, according to a British Bankers’ Association (BBA) survey published this week.

Total outstanding notionals of credit derivatives is predicted to surpass the $8-trillion mark by 2006, with index trades seeing substantial growth, the BBA's latest survey of 30 market participants found.

Hedge funds’ share as sellers in the market has surged from 5% in 2001 to 15% in 2003, while their share as buyer has risen from 12% to 16%. The share of banks in both the buying and selling areas remained steady at 51% and 38%, respectively. Overall, 34% of respondents classified themselves

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