The Bank for International Settlements reported that over-the-counter derivatives market saw strong growth in the first half of 2006.

Notional amounts of all types of OTC contracts stood at US$370 trillion at the end of June, 24% higher than six months before, the BIS reported. It observed rapid growth in credit default swaps, accelerating growth in interest rate and FX products, slowing growth in commodity and equity derivatives, and that the concentration in OTC derivatives markets remained stable.

Growth was particularly strong in the credit segment, where the notional amounts of outstanding credit default swaps increased by 46%. Rapid growth was also recorded in other market segments. Open positions in interest rate derivatives rose by 24%, while those in FX contracts expanded by 22%. Equity and commodity contracts grew at 17% and 18%, respectively.

Gross market values, which measure the cost of replacing all existing contracts and thus represent a better measure of market risk at a given point in time than notional amounts, increased by 3% to US$10 trillion at the end of June, the BIS added.