Credit and interest-rate derivatives had a bumper year as investment and commercial banks couldn't get synthetic collateralized debt obligations out of the door quick enough and end users flooded back to the market to hedge interest-rate exposure on the back of eleven Federal Reserve rate cuts. In Europe, pension funds also joined the rush to hedge with interest-rate derivatives, driving up demand.
However, equity derivatives professionals' bonuses likely will be slimmer, reflecting the deleterious 12 months the cash equity markets suffered.
Year In Review:
Alternative Investments Benefit From Increased Demand