Market declines leave dealers better placed to hedge volatility

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Structured product issuers are better prepared to hedge structured products as the acute reduction in the market capitalisation of financial stocks has led volatility to behave more consistently, according to dealers. The current situation is in sharp contrast to September last year, when many dealers found themselves caught out after the unexpected spike in volatility resulting from the Lehman Brothers bankruptcy (Structured Products, January 2008).

"So far this year, volatility has actually beh

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