The Bank for International Settlements reported that notional amounts outstanding of over-the-counter derivatives continued to expand in the first half of 2008, although credit default swap volumes ticked down.

Notional amounts of all types of OTC contracts stood at US$683.7 trillion at the end of June, 15% higher than six months before, the BIS said.

However, terminations of outstanding contracts resulted in the first ever decline in the volume of outstanding credit default swaps since the first publication of CDS statistics in December 2004, down 1%. The average growth rate for outstanding CDS contracts over the last three years has been 45%.

In contrast to CDS markets, markets for interest rate derivatives and FX derivatives both recorded significant growth, the BIS observed. Open positions in interest rate derivatives contracts rose by 17%, while those in FX contracts expanded by 12%.

Also, the BIS said that gross market values, which measure the cost of replacing all existing contracts and are thus a better gauge of market risk than notional amounts, increased by 29% to US$20.4 trillion at the end of June 2008.