ISDA: Dealer derivs activity vital for liquidity, customer hedging

By Beth Shah
11 Aug 2014

Derivatives volume pertaining to trades between reporting dealers is critical for market liquidity and the facilitation of client trades as it allows end users to put on risk-reducing and cost-effective hedges, according to a research study from the International Swaps and Derivatives Association.

According to publicly available data published by the Bank for International Settlements, 35% of over-the-counter interest rate derivatives market turnover relates to dealer market-making and the hedging of customer transactions. ISDA noted that the BIS data does not support some claims that dealer derivatives activity is purely speculative ...

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