The history of the credit derivatives market is inextricably linked to JP Morgan. In the 1990s, under the leadership of Douglas Warner, the bank decided to increase its return on capital. Finding a way to hedge the credit exposure on its huge loan book and release capital was identified as the way to achieve this.
Other banks, most notably Bankers Trust, had put together trades that could be considered forerunners of today's credit default swaps (CDSs). However, the work done at JP Morgan to