Whitepaprs

White Paper Excerpt

Trading in over-the-counter (OTC) and exchange-based derivatives has grown tremendously during the past several years and shows little sign of abating. As Fig. 1 illustrates, the notional amounts for all OTC derivatives reached $415 trillion in December 2006 — up from $285 trillion in December 2005 and $111 trillion in December 2001.¹ Similarly, the number of exchange-traded futures and options contracts reached nearly 11.9 billion in 2006, up from 10 billion in 2005.² A variety of factors are fueling this rapid growth, including market volatility, an increased focus on managing risk, and increased activity from hedge funds, banks, insurance firms, and other parties.

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derivatives, fpml, xml